Search Mark
Home / Industry Dynamics

Saudi Wealth Fund to Restructure Management Amid Budget Strain 


Today’s News 

Saudi Arabia’s USD 925 billion sovereign wealth fund, the Public Investment Fund (PIF), is planning a major management reorganization to address rising costs and enhance investment success. 

The wealth fund is controlled by Crown Prince Mohammed bin Salman, Saudi Arabia's de facto ruler since 2015 

Image Source: Arab News
The wealth fund is controlled by Crown Prince Mohammed bin Salman, Saudi Arabia’s de facto ruler since 2015 
Image Source: Arab News 

Saudi Arabia’s USD 925 billion sovereign wealth fund, the Public Investment Fund (PIF), is considering a reorganization that would shift some internal responsibilities from its governor, Yasir Al-Rumayyan, to other managers. This move comes as the fund seeks to focus on investments with higher success potential amid rising costs, according to sources familiar with the matter. 

The PIF, which is central to Crown Prince Mohammed bin Salman’s Vision 2030 economic diversification plan, is scaling back some of its grandiose projects, including NEOM, a vast urban and industrial development along the Red Sea. Notably, “The Line,” a futuristic city project within NEOM, is under revision due to escalating costs. 

In addition to internal restructuring, the PIF aims to attract more foreign investment and may review expenses, including high consultancy fees from firms like BCG and McKinsey. A source indicated, “The fund may combine some business lines and create new ones.” 

This reorganization would be the most significant management change since Crown Prince Mohammed appointed Rumayyan in 2015. Under Rumayyan, the PIF’s assets have grown from around USD 150 billion to USD 925 billion, and he remains a prominent figure in both Saudi Arabia and the global investment community. 

The Public Investment Fund (PIF) is focusing on more successful investments after scaling back some major projects due to rising costs 
Image Source: Arab News 
The Public Investment Fund (PIF) is focusing on more successful investments after scaling back some major projects due to rising costs 
Image Source: Arab News 

The PIF has made high-profile investments in various sectors, including financial services, aviation, tourism, and industry. It also owns significant stakes in international entities like Uber, Blackstone, and SoftBank, and controversially backed a new international golf series, leading to accusations of “sportswashing.” 

Despite its vast investments, Saudi Arabia continues to rely heavily on oil revenues, and the country is facing increased public spending demands. Lower oil prices and production cuts contributed to a fiscal deficit of USD 21.6 billion last year, with a similar shortfall expected this year. 

To diversify its funding sources, the PIF raised USD 5 billion through a bond sale in January and USD 3.5 billion from a sukuk in October, with more debt sales planned. Additionally, Aramco transferred an 8% stake to the PIF in March, doubling the fund’s holding in the state-owned company to 16% and providing access to lucrative dividends. 

A spokesperson for PIF declined to comment on the ongoing discussions, and both BCG and McKinsey did not provide immediate responses. 

Other News

London Pins Hopes on Sunak’s Summer Election 

With Britain heading back to the polls, the financial sector in London anticipates relief from years of political uncertainty. Industry leaders aim to enhance the City’s global competitiveness and attract investments. 

G7 Finance Ministers Unite Against Russia and China 

G7 finance ministers are poised to leverage tougher sanctions and tariffs against Russia and China. Plans are underway to utilize Russia’s frozen assets to aid Ukraine while monitoring China’s nonmarket practices. 

Teamsters’ Unionization Efforts Stall at Amazon and FedEx 

Despite securing significant gains at UPS, the Teamsters face challenges in organizing workers at Amazon and FedEx, where high turnover and contractor employment models complicate unionization efforts. 

Share to

Industry Dynamics

Australian Mexican Restaurant's Shares Soar 36% on IPO Debut

Shares of the Australian Mexican restaurant chain, Guzman Y Gomez (GYG.AX), soared by more than one-third on their trading debut, marking the country's largest IPO in a year.  

2024-6-20 | Industry Dynamics

Federal Reserve Treads Carefully Towards Potential Rate Cuts 

Federal Reserve officials are cautiously optimistic about potential interest rate cuts later this year, seeking further signs that inflation is subsiding without negatively impacting a robust labor market.

2024-6-19 | Industry Dynamics

Berkshire Hathaway Nears 29% Stake in Occidental Petroleum 

Warren Buffett's Berkshire Hathaway has significantly expanded its investment in Occidental Petroleum OXY.N, acquiring an additional 2.95 million shares, as detailed in a regulatory filing.

2024-6-18 | Industry Dynamics