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Consolidating giga-projects pushes PIF into profit

public investment fund PIF and its subsidiaries’ stake in Aramco doubled to 16 percent this year via an 8 percent share transfer profit Aramco
PIF and its subsidiaries’ stake in Aramco doubled to 16 percent this year via an 8 percent share transfer
  • Revenues double to $88.3bn
  • Five projects consolidated
  • Net income of $36.8bn

Saudi Arabia’s Public Investment Fund (PIF) swung into profit in 2023, with revenues doubling to $88.3 billion.

According to an audited financial statement the sovereign wealth fund has consolidated five schemes as it manages giga-project costs. 

PIF owns the development projects at the heart of Saudi Arabia’s economic reform plan but is now facing funding problems because oil prices are below the Saudi breakeven price and there has been lower than expected foreign direct investment. 

Revenue rose mainly because of higher investment returns and equity revenues, giving net income of $36.8 billion, a turnaround from a loss of $16 billion in 2022. 

Assets jumped by a quarter over the year to $977 billion from $778 billion. Assets under management were estimated at $925 billion in June this year. 

James Swanston of Capital Economics said the government could transfer more ownership of the state oil giant Aramco to PIF to get closer to PIF’s target of $2 trillion assets under management by 2030. 

“Given the trend of Aramco ownership transfers that seems the likeliest way of how that is reached,” he said.

“At the current share price, it would require a further 60 percent of ownership to be transferred to the PIF to hit $2 trillion.” 

PIF and its subsidiaries’ stake in Aramco doubled to 16 percent this year via an 8 percent share transfer. PIF is not itself a listed company. 

The report showed that the number of PIF subsidiaries jumped from 146 to 168 in 2023, all local acquisitions.

Swanston said this aligned with the stated PIF policy of reducing the share of external investments from around 30 percent to 20 to 25 percent. 

The report revealed that four mergers have taken place this year, in addition to the sports and entertainment giga-project Qiddiya subsuming the recreational developer Seven in May.

Uptown Jeddah Company was transferred to the housing giga-project Roshn and Electronic Gaming Infrastructure Company was transferred to Saudi Electronic Gaming Holding (Savvy). Saudi Jordanian Investment Fund and Safety-First Investment Company were both transferred to Saudi Jordanian Investment Company. 

The International Monetary Fund praised the government’s recalibration of the giga-projects to manage financial headwinds in its June report on Saudi Arabia, , but called for more transparency.

“Making public the main implications of this exercise – particularly on spending and sectoral priorities up to 2030 – will be important to help provide clarity on government priorities to investors and the public,” it said. 

The IMF said foreign assets held by PIF and other government-related entities form “strong additional buffers” against budget deficits foreseen over the next three years.

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