Saudi sovereign wealth fund splashes cash in 2023

Saudi Arabia’s Public Investment Fund accounted for about a quarter of the almost $124 billion spent by sovereign wealth funds worldwide last year, a report published on Jan. 1 showed.

PIF’s whopping $31.5 billion spend in 2023 compared with $123.8 billion for all sovereign wealth funds, based on a preliminary annual report from industry specialist Global SWF, which tracks the world’s sovereign investment funds.

The strong rally last year in global stocks helped to swell the assets managed by the sovereign wealth funds worldwide to a record $11.2 trillion.

Total sovereign-controlled spending on the energy transition – everything from green hydrogen to lithium mining – also hit a record $25.9 billion in 2023, the report said.

Despite this, total spending by the sovereign wealth funds last year was 21 per cent below 2022.

“This may signal an overly cautious approach, as there is no shortage of capital to put to work among these institutions,” Global SWF managing director Diego López said in the report.

Singapore’s GIC, which led spending by wealth funds for the past six years, invested 48 per cent less in 2023, despite a $144 billion inflow from the country’s central bank.

Gulf funds were able to increase their dealmaking dominance, largely at the expense of Canadian and Singaporean funds, the Global SWF report showed. Gulf funds now account for nearly 40 per cent of the investment value deployed by sovereign wealth funds.

Data provided by groups such as Global SWF is closely watched as not all sovereign funds release annual reports, and five of the top 10 do not reveal an exact total of their assets under management.

GAMING AND SPORT

Global SWF’s report did not break out individual investments by Saudi Arabia’s PIF, but its lavish spending on soccer and golf has made waves across the sporting world.

In June, Saudi Crown Prince Mohammed bin Salman announced PIF would take control of the country’s four leading soccer clubs, Al-Ittihad, Al-Ahli, Al-Hilal and Cristiano Ronaldo’s Al-Nassr.

In June, Saudi stunned the golf world, with a shock merger agreement between the PGA Tour, DP World Tour and rival LIV circuit, which is backed by the Saudi PIF. That merger is not yet finalised.

Aside from its splurge on sport, the Kingdom’s biggest investments were in other sectors and 42 per cent of this spending was at home.

Big-ticket purchases included $4.9 billion for US gaming company Scopely, $3.6 billion to buy Standard Chartered’s aircraft leasing division and $3.3 billion for steelmaker Hadeed.

“The variety of deals shows the unparalleled bandwidth and reach of PIF and its subsidiaries, which are forming a wide net to capture any value-add for Saudi Vision 2030,” López said, referring to the country’s economic transformation plan.

The Global SWR report also highlights PIF plans to launch an airline and its own electric vehicle brand. The report said the fund has an $8.1 billion stake in gaming companies Activision Blizzard, Electronic Arts and Take-Two – part of plans to turn the country into a gaming hub.

Looking ahead to 2024, Global SWF expects assets for all state-owned investors – including sovereign wealth funds, central banks and pension funds — to surpass a previous peak in 2021 of $50.8 trillion in assets under management as they take account of the paper gains of the past year.