Despite splashy investments in megacities and sports teams, the success of Saudi Arabia’s Public Investment Fund (PIF) is being called into question.
What happened: A close look at the fund’s 2024 financials show that the PIF is struggling in its attempt to diversify the kingdom away from oil. While assets under management climbed 19%, making it one of the world’s fastest-growing sovereign wealth funds, the growth was largely driven by a transfer of equity in state oil company Saudi Aramco.
- The PIF also cut about US$8 billion from the valuations of its five gigaprojects — like the flagship futuristic city Neom — which are set to be seriously scaled back.
Why it matters: The PIF is meant to be the “main driver” of Saudi Arabia’s ambitious Vision 2030 plan to diversify the economy away from oil and create a new society. Its recent struggles call this plan into question, and show how it remains dependent on oil for growth.
- With oil prices on a steady decline, further restricting financing, critics feel a change of course is needed. For the PIF’s part, it’s betting that AI data centres can replace oil.
Zoom out: Poor PIF performance can affect foreign companies. For example, the fund recently sold off shares of several firms, including Canada’s Shopify, to raise cash.—QH