PIF signs Japan and Hong Kong pacts worth $52bn

Reuters/Hamad I Mohammed

• Deals with five Japanese banks
• Plan for $1bn Hong Kong fund
• Financial collaboration prioritised

Saudi Arabia’s Public Investment Fund has signed memorandums of understanding (MoUs) worth up to $51 billion with five Japanese banks. 

The kingdom’s sovereign wealth fund said the agreements cover a variety of areas, including encouraging two-way capital flows through both debt and equity. 

The agreements were signed with Mizuho Bank, Sumitomo Mitsui Financial Group, MUFG Bank, Japan Bank for International Cooperation and Nippon Export and Investment Insurance.

PIF said the deals are part of its strategy to boost financial collaboration globally and enhance cooperation in finance and investment. 

The MoUs cover both PIF and portfolio companies, as well as Japanese companies and financial institutions, the statement said. 

PIF on Thursday also signed an agreement at the Future Investment Initiative (FII) in Riyadh with the Hong Kong Monetary Authority to work towards establishing a new investment fund with a target size of $1 billion. 

The investment fund will target companies that have connections to Hong Kong in manufacturing, renewables, fintech and healthcare that want to expand their operations into Saudi Arabia.

The investments would help create highly skilled jobs in Saudi Arabia and give companies an opportunity to establish a regional base in the Middle East. 

PIF said the proposed new fund aligns with its strategy of economic diversification and sustainability.

The new fund would promote foreign direct investments via Hong Kong, providing a platform for companies to internationalise their businesses and have access to investment opportunities in Saudi Arabia.

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PIF on Wednesday announced plans to back Brookfield Asset Management’s new $2 billion Middle East fund, helping the Canadian investment firm pursue deals in the Gulf.

The investment platform, known as Brookfield Middle East Partners, will target $2 billion from a range of investors and intends to focus on buyouts and structured solutions, among other investment opportunities in the region.

Speaking at the FII on Wednesday, PIF governor Yasir Al-Rumayyan said the company is planning to reduce its foreign investments to around a fifth of its total assets under management as it focuses on domestic funding and artificial intelligence.

This month, the kingdom revised its foreign direct investment numbers upwards using a new methodology, doubling the FDI inflow figure for 2023 to $25.5 billion. 

Saudi Arabia has a target of $100 billion in annual FDI inflows by 2030 but low numbers have put extra pressure on PIF to fund its $1.25 trillion economic development plan.