Saudi crown prince has been busy in New York, signing deals and agreeing to business plans that will greatly impact the Kingdom.
Saudi PIF going global
According to the Financial Times (FT), Saudi Arabia’s Pubic Investment Fund (PIF) is considering opening offices around the world as it plans to expand its assets under management to $400bn by 2020 through overseas as well as domestic investments.
Speaking at a gathering of Saudi and US business leaders in New York, Yasir al-Rumayyan, managing director of the kingdom’s Public Investment Fund said the PIF had grown from around 50 people in 2015 to 240 today and he sought to double this number by the end of the year.
“The PIF has become the vehicle through which the powerful crown prince Mohammed bin Salman has sought to drive the transformation of the kingdom’s economy through high-profile investments. It currently has more than $250bn assets under management,” said FT.
“The PIF aims to raise funding from the proceeds of privatising state assets, including the planned stock market listing of energy giant Saudi Aramco, government allocations and debt.”
The PIF has so far invested $3.5bn for a stake in Uber, $45bn with Japan’s softbank and “put up half the capital for a $40bn infrastructure fund managed by private equity company Blackstone.”
“It recently agreed to invest $400 million in Magic Leap, which develops “mixed reality” headsets.”
Bloomberg reported that Saudi Arabia and SoftBank Group Corp. signed a memorandum of understanding to build a $200 bn, 200GW of solar power development, bigger than any in existence.
SoftBank founder Masayoshi Son, unveiled the project Tuesday in New York at a ceremony with Saudi Crown Prince Mohammed Bin Salman.
The first two solar parks within this project will cost $5bn of which SoftBank will invest $1bn and generate over 7GW of power.
Russia Saudi oil alliance
In a Reuters exclusive, it announced that Saudi and Russia are working on a historic long-term oil pact.
Saudi Crown Prince Mohammed bin Salman told Reuters that Riyadh and Moscow were considering a deal to greatly extend a short-term alliance on oil curbs that began in January 2017 after a crash in crude prices.
“We are working to shift from a year-to-year agreement to a 10 to 20 year agreement,” the crown prince told Reuters in an interview in New York late on Monday.
“We have agreement on the big picture, but not yet on the detail.”
Russia, not an OPEC member has worked alongside the 14-member group during previous oil gluts, “but a 10 to 20 year deal between the two would be unprecedented.”
“Top OPEC producer Saudi Arabia recruited Russia and other non-OPEC countries to help drain oversupply when oil prices collapsed to below $30 a barrel in 2016 from over $100 in 2014,” said Reuters.
This has helped crude recover to $70 but with the threat of shale raising production, prices are by no means stable.
The crown prince predicted that world oil demand would not peak until 2040 but Riyadh plans to raise funds through the 5% IPO of Saudi Aramco.
Saudi Oil Minister Khalid al-Falih said last week that documentation was ready but that a venue for the IPO had not yet been decided, but that the IPO would go ahead in H2 2018.