The Public Investment Fund (PIF) committed to investing in promising sectors and we're looking for new investment opportunities in MENA

The Public Investment Fund (PIF) has developed a strategy for the private sector's participation by expanding opportunities for local firms to contribute to the PIF's projects, motivating local suppliers to develop their energies and capabilities, increasing the localization of imported goods and services, and opening up prospects for investment opportunities for the PIF to improve the local supply chain.

The PIF works to establish a sustainable sector in the field of power generation through investments it implements with leading companies in the field of renewable energy, in line with the plans and objectives of government sectors and with the participation of the private sector through supply chains, with the aim of localizing renewable energy technologies that are concentrated in the value chain of solar panels and wind turbines.

PIF's Deputy Governor and Head of Middle East and North Africa Investments at the PIF, Yazeed bin Abdul-Rahman Al-Humaid, in the first extensive interview with "Riyadh" stressed the PIF's role in promoting the renewable energy sector in the Kingdom of Saudi Arabia, where the PIF recently announced the formation of consortium with ACWA Power, in which the PIF owns a 50% stake, to implement the Sudair Solar PV Plant project in Sudair Industrial City through Badeel Company wholly owned by the PIF. The Plant will contribute to meeting the energy needs of 185,000 housing units, and reducing carbon emissions by about 2.9 million tons annually. The project recorded the second lowest cost globally for Solar PV electricity production. It is also an important move within the PIF's renewable energy program, which includes developing 70% of the renewable energy generation capacity in the Kingdom by 2030 in line with the ambitious goals of the Kingdom’s Vision 2030.

Yazeed bin Abdul-Rahman Al-Humaid pointed out that the PIF, which is a mainstay in achieving the Kingdom’s Vision 2030, during the period from 2016-2020, invested in the Saudi economy by SAR 311 billion, provided 331,000 direct and indirect job opportunities in the local market, and also aspires to provide nearly 1.8 million direct and indirect jobs by 2025.

He said: The PIF is continuing to establish a large number of diverse sectors and companies within the Kingdom in light of its efforts to promote the economic growth and empower the private sector. To ensure achieving the best results, the PIF has established a specialized department to support national development and enhance the economic impact of the PIF's investments. This department aims to achieve three main objectives: studying and enhancing the economic development impact, determining the strategic directions of the PIF on economic and social development, and measuring the economic impact of the PIF's strategy and investments.

- Why is the PIF necessary? And what is the strategic angle that is not limited to just achieving financial returns?

The PIF is a mainstay in achieving the Kingdom’s Vision 2030. Its role is not limited only to developing the Kingdom’s wealth by investing in locally and globally feasible projects, but also extends to support efforts for development and economic diversification in the Kingdom of Saudi Arabia.

The PIF works on this by investing in incentive local projects, which will achieve the growth potential of the priority sectors in the Kingdom, thus contributing to creating a comprehensive economic impact, the most prominent manifestations of which are job creation, contributing to the growth of non-oil GDP, increasing local content, the prosperity of the sector private sector, improving the life quality in general, and consolidating the Kingdom's leading position in the world at various levels.

Over the past years, the PIF has contributed to the establishment of many leading national companies, financing and engaging in a myriad of vital projects and companies, as well as providing financial support to initiatives of strategic importance to the national economy, which have had a tangible positive impact both locally and globally.

Under the leadership of His Royal Highness Mohammad bin Salman, Crown Prince, Deputy Prime Minister, Chairman of the Council of Economic and Development Affairs, and Chairman of the Board of Directors of the Public Investment Fund, may God protect him, the PIF managed to achieve its investment targets locally and globally. Figures indicate a high volume of assets under management to about 1.6 trillion SR, and the PIF aspires to maximize these assets to SAR 4 trillion by the end of 2025. The PIF and its subsidiaries also aim to contribute to the non-oil GDP by 1.2 trillion SR cumulatively by the end of 2025.

- What are the reasons for the PIF's recent development of the organizational structure?

Undoubtedly, this important step comes as an affirmation of the leadership role of the PIF by developing its organizational structure, which contributes to ensuring the continued rapid pace of work and achieving the highest levels of efficiency. It also enhances the PIF's internal governance system, serves to guide its investment strategies locally, globally and to achieve its goals stated in the PIF's Strategy 2021-2025. 

At the level of the PIF's Middle East and North Africa Investments, we continue to search for new investment opportunities, which help us build strategic economic partnerships that will contribute to maximizing the PIF's assets and enable us to transfer technologies and knowledge to achieve its strategic goals, by attracting international companies to invest in local projects, a matter which helps us localize pioneering technologies, as we have lots of attractive investment opportunities in the Middle East and North Africa.

In this regard, we work through our investments and companies in the region in an integrated manner to enhance mechanisms and plans for the localization of technologies and knowledge, in line with the programs of Vision 2030, as these markets enjoy different capabilities that we can benefit from in the Kingdom and achieve integration with them through the value chain.

Undoubtedly, these investment opportunities will contribute to launching new and promising sectors in the Kingdom and the region in general. We have many successful experiences by the PIF's companies that have been able to expand at the regional level, such as the Saudi Telecom Company (STC), which has a strong presence in the Kingdom and the region, and has become the highest value brand in the telecommunications sector in the Middle East, and the third in all sectors in the Middle East. It is also ranked second in Bahrain and Kuwait, with shares of 38% in Bahrain and 34% in Kuwait.

This in addition to our investment in several regional companies such as Addis International Holding Company, which is one of the largest providers of drilling and exploration services in the oil and natural gas sector in the Middle East and North Africa. It announced its intention to move its headquarters to the Kingdom of Saudi Arabia, within the framework of its comprehensive future vision, a matter which will contribute to further supporting the growth of the private sector by localizing knowledge and providing advanced technical solutions in the field of exploration and production. The PIF also invested a 50% stake in Americana Group, a leader in restaurant and food industry in the Middle East and North Africa, located in 12 countries and aspires to double its size (current revenue is USD 3 billion) by 2025.

- What is PIF's role in achieving the goals of the Kingdom's Vision 2030? Has the PIF become a competitor to the private sector in development projects?

The link between the PIF’s Strategy and Vision 2030 is very close. In a short period of time, the PIF was able to become a mainstay in promoting the growth of the Saudi economy and diversifying its sources of income, in a manner that achieves a development value with positive impact on the citizen and future generations. The PIF's total local investments amounted to 311 billion SR in the past four years, and it is committed to continuing to contribute to efforts to diversify sources of income and support the growth of the Saudi economy.

As for the PIF's relationship with the private sector, His Royal Highness Prince Mohammad bin Salman confirms his constant keenness on the importance of empowering the private sector. Undoubtedly, the local private sector is the PIF's most important partner, and is an active essential element and partner in the implementation of its projects.

In confirmation of this approach, the PIF is carrying out an ambitious strategy through which it launched vital and promising sectors that contribute to empowering the private sector. This strategy also aims to increase the contribution to local content to 60% in the PIF and its subsidiaries, a matter which provides a direct impact on empowering the local private sector and creation of jobs.

To ensure the achievement of these goals, the PIF takes into account, when planning any investment transaction, to ensure that it achieves the main factors: achieving financial returns, positive impact on the national economy, localization, achieving added value, and participation of the private sector.

His Excellency the PIF's Governor, Mr. Yasir bin Othman Al-Rumayyan, stressed that the PIF is very keen to contribute to the economic development in the Kingdom by activating and developing vital and promising sectors that contribute to empowering and enhancing the participation of the private sector, and they are even an important element of the PIF's business model, as the PIF evaluates the impact of its investment initiatives on the private sector comprehensively and accurately. The PIF has developed a strategy for the private sector's participation by expanding opportunities for local firms to contribute to the PIF's projects, motivating local suppliers to develop their energies and capabilities, increasing the localization of imported goods and services, and opening up prospects for investment opportunities for the PIF to improve the local supply chain.

The spending directed to the PIF is expected to create many opportunities for the participation of the private sector "as an investor and a partner in the PIF’s investments and as a supplier to companies."

Examples include the Red Sea Project's announcement of contracting with Nesma & Partners Contracting Co. Ltd., and Almabani General Contractors (AGC), to develop the air navigation infrastructure, Qiddiya Investment Company's announcement of granting a contract worth SAR 700 million for a period of three years to Shibh Al-Jazira Contracting Co. (SAJCO) to construct rainwater drains, roads and bridges in the project, and the Saudi Public Pension Agency (PPA) and the Saudi Real Estate Refinance Co (SRC)'s announcement of signing an agreement to mortgage portfolio worth over SAR 3 billion, in an agreement that is the largest in the residential real estate refinancing market in the Kingdom.

- Is the Kingdom now qualified to enter and invest in the renewable energy sector?

Certainly! Empowering the energy sector receives the support of the wise leadership. It is one of the most important sectors that provide sustainable solutions in facing the challenges of climate change. The PIF's role is complementary to achieving the Kingdom's goals of promoting the growth of renewable energy and localizing related technologies. We are committed to investing in promising sectors that will shape the future of the global economy, and we seek, through our international partnerships, to maximize returns to the local economy, provide added value towards transferring technology and localizing knowledge, as well as expanding opportunities for local companies to contribute to the PIF's projects, aiming to increase the contribution to local content to 60% in the PIF and its subsidiaries by the end of 2025.

The PIF has been able to make many achievements in terms of localizing technologies and knowledge, through its investments in advanced sectors of renewable energy, artificial intelligence, electric vehicles, and others. These investments have paved the way for Saudi youth to obtain training and employment opportunities.

From a comprehensive perspective of the renewable energy sector, the Kingdom has success potential as follows:

Natural resources: This feature is linked to the abundance of renewable natural resources in the Kingdom, the most important of which is solar radiation, in addition to raw materials such as silica and others, which gives us priority in assuming a major role to benefit from the low cost of power generation.

Vision 2030 Strategy: It has given the Saudi government a real competitive advantage to build the renewable energy system. The PIF works with government and concerned agencies according to clear plans to complete the system and ensure success in this sector (Vision 2030 provides clear key performance indicators in which all of these parties are engaged.)

PIF: The PIF works to establish a sustainable sector in the field of power generation through investments it implements with leading companies in the field of renewable energy, in line with the plans and objectives of government sectors and with the participation of the private sector through supply chains, with the aim of localizing renewable energy technologies that are concentrated in the value chain of solar panels and wind turbines. The PIF recently announced the formation of consortium with ACWA Power, in which the PIF owns a 50% stake, to implement the Sudair Solar PV Plant project in Sudair Industrial City through Badeel Company wholly owned by the PIF. The Plant will contribute to meeting the energy needs of 185,000 housing units, and reducing carbon emissions by about 2.9 million tons annually. The project recorded the second lowest cost globally for Solar PV electricity production. It is also an important move within the PIF's renewable energy program, which includes developing 70% of the renewable energy generation capacity in the Kingdom by 2030 in line with the ambitious goals of the Kingdom’s Vision 2030.

-What criteria does the PIF adopt in choosing its investments and sectors within the Kingdom?

The PIF invests in a comprehensive manner, searching across the value chain for opportunities that can achieve long-term investment returns, and identifying partners capable of achieving technical transformation, with a focus on industries that support the PIF's efforts to advance the economic transformation of the Kingdom, in line with Vision 2030 and the global economy.   It's worth mentioning that the PIF, during the period from 2016-2020, invested in the Saudi economy by SAR 311 billion, provided 331,000 direct and indirect job opportunities in the local market, and also aspires to provide nearly 1.8 million direct and indirect jobs by 2025. It is worth noting that the Fund invested about 311 billion riyals in the Saudi economy in the period 2016-2020, and contributed to generating 331,000 direct and indirect jobs in the local market, and also aspires to generate about 1.8 million direct and indirect jobs by 2025. In this context, the PIF is continuing to establish a large number of diverse sectors and companies within the Kingdom in light of its efforts to promote the economic growth and empower the private sector. To ensure achieving the best results, the PIF has established a specialized department to support national development and enhance the economic impact of the PIF's investments. This department aims to achieve three main objectives: studying and enhancing the economic development impact, determining the strategic directions of the PIF on economic and social development, and measuring the economic impact of the PIF's strategy and investments.

The decision to engage the PIF's in the value chain is thus made carefully, as we review the available options, and seek to participate in the parts of the value chain that we believe they desperately need us, while at the same time achieving the greatest impact for all stakeholders, in order to ensure the greatest possible impact.

For example, choosing to establish the Fund of Funds Company (Jada) with the aim of stimulating investment in private equity and venture capital funds, and thus promoting the growth of the small and medium-sized enterprises sector in the Kingdom, as Jada achieved ambitious goals by investing nearly SAR 1.4 billion in 18 investment funds so far. This is in addition to the company's efforts to develop the financial sector and invest in private equity and venture capital funds. Jada launched the "Development of Emerging Fund Managers" Program with the participation of many emerging fund managers, and it contributed to the establishment of a sustainable financial sector that forms the backbone of supporting entrepreneurship in the Kingdom.

- The PIF owns a number of local companies or participates in their ownership... Is there a tendency to offer any of them in the local stock market this year?

The initial public offering is one of the effective ways applied by sovereign wealth funds to achieve value for their assets, and to continue recycling capital into new investments. The PIF seeks to be an active participant in the Saudi financial markets, through the inclusion of its Saudi subsidiaries, after ensuring their readiness for the offering, which supports the development of the Saudi Stock Exchange (Tadawul) through the total market value, deepening the market by increasing the number of companies listed in it, and encouraging the private sector and local and foreign investors to participate in the Saudi capital markets, and at the same time listing in the Saudi Stock Exchange benefits the subsidiaries themselves.

The PIF has a successful experience in listing a number of its subsidiaries, in coordination with the Financial Sector Development Program. The PIF now owns, within its local portfolio, a myriad of companies in a developed stage that entitles them to be among the appropriate companies to be listed in the Stock Exchange. Many of these companies have reached advanced stages in preparation for the initial public offering, which is a comprehensive preparation process that includes completing financial and legal studies and obtaining approvals from supervisory authorities in the sector and the Capital Market Authority (CMA).

Recently, we saw the announcement that ACWA Power, the leading company in the supply of energy and water desalination, obtained the CMA's approval, to request the public offering of 11.1% of the company's shares. In addition, we intend to offer other companies such as Tadawul, and Elm, the leading digital solutions company.

In general, we have become more present and connected with the companies in which we contribute, by defining a framework for the governance of our relationship with the companies in which we contribute in line with the best local and international practices so as to achieve the goal of following up the performance of companies, in addition to achieving a positive impact on the shareholders, boards of directors, managements of companies and regulatory authorities.

Believing that our representatives on the boards of directors – whose number exceeds 400 representatives - are the most important party capable of creating an added value for their companies, we have adopted a very precise mechanism for the process of their nomination and selection that takes into account the various details of each company. The procedures for nominating our representatives to the boards of directors are based on the PIF's vision and strategy towards the company, where we thoroughly study the company and its board of directors in order to determine the quality of specializations, skills, expertise and experiences required in order to choose representatives of the best competencies.

- Tell us about the PIF's orientations towards promising sectors.. What are the most prominent projects completed in this regard?

The PIF aims to make its local investments represent approximately 75-80% of the volume of its investments. It also launched ten new sectors, and established more than thirty companies operating in many local sectors. During the next five years, it aims to focus on thirteen vital and strategic local sectors such as (service utilities, renewable energy, aviation and defense, vehicles, transportation and logistics, minerals and mining, financial services, health care, communications, media and technology, food and agriculture, and others).

The PIF has worked on selecting these thirteen priority sectors based on the following criteria: evaluating the sectors based on the global and local perspective in terms of analyzing market attractiveness, size, expected growth and available opportunities, evaluating the sectors in which the Kingdom has potential for motivation and competitive advantage at the regional and global levels, and their impact on the economy, prioritizing sectors in accordance with Vision 2030 and the programs to achieve them.

The PIF aims to build long-term strategic international partnerships that achieve its investment objectives, provide added value towards technology transfer and localization of knowledge, and increase the contribution to local content to 60% in the PIF and its subsidiaries by the end of 2025.

Basically, through the portfolio of promising sectors and its development, we focus on establishing and developing new sectors that contribute to paving the way for private sector entry and attracting investors into the local market. For example, the establishment of the National Energy Services Company (Tarshid), which plays a key role in the development of the energy efficiency sector by rationalizing energy consumption, aims to attract international companies specialized in the area, attract foreign investments, contribute to creating jobs that require high skills, and attract knowledge to the Kingdom.

Among the most prominent achievements in the past period is the replacement of more than 1.5 million traditional street lighting lamps with LEDs all over the Kingdom, and the rehabilitation of more than 2,000 government buildings in an effort to reduce costs and raise consumption efficiency. Tarshid made a saving of 1.2 terawatt-hours, equivalent to saving 712,000 barrels of oil equivalent, and reduced carbon dioxide emissions up to 800 million metric tons, a matter which contributed in the saving of sums amounting to SAR 387 million to the government until 2020, and the growth of the number of companies licensed in energy efficiency from four companies in 2017 to more than thirty companies by the end of 2020.

- What are the PIF's plans to recycle its capital into mature companies? What is the impact of this on the local economy?

His Royal Highness Crown Prince Mohammad bin Salman explained that the PIF operates with a policy of not keeping assets, by selling shares in mature investments. His Highness also indicated that the PIF works to maintain its share in some market-listed companies, which enables it to contribute to decision-making in a manner that contributes to the growth of this company.

As is the case in all financial institutions, the PIF works constantly to evaluate its assets in the local and global markets, where it establishes companies or acquires assets and companies and then develops and sells them later, with the aim of launching and developing strategic sectors with an economic stimulus effect, in a manner that achieves the highest returns for it, contributes to increasing the participation of the private sector by raising the percentage of investors’ ownership in the Saudi market, enhances the depth of the Saudi financial market in accordance to the financial sector development program under Vision 2030, and in a way that brings the desired benefit to the Saudi economy, and this is the basis for the PIF’s investment activities.

As the PIF is an active investor, it always seeks to increase value and find investments that represent new opportunities for the growth of its portfolio companies. It applies best international practices in all stages of direct investment, where five specialized committees undertake the tasks of guidance and review of all investment decisions, starting from the stage of reaching the opportunity and ending with sale for investment (asset's reaching stage of maturity).

For example, the PIF sold Saudi Basic Industries Corporation (SABIC), which had a common benefit to all parties, and served as a qualitative leap for three of the most important economic institutions in the Kingdom, leading to capital recycling that enhances the PIF's long-term investment strategy and at the same time leading the economic and development transformation in the Kingdom.