Saudi Arabia’s Hometown Ambitions Could Clip Wealth Fund’s Wings | 10/25/2018 | Staff
Emzah92 (Posted by) Level 3
RIYADH (Reuters) – Saudi Arabia’s Public Investment Fund (PIF) risks being pulled deeper into Crown Prince Mohammed bin Salman’s domestic projects, curbing its international ambitions and tying its fortunes closer to its home market, four sources familiar with its strategy said.

Unusually for a sovereign wealth fund, which typically is solely focused on generating wealth for future generations, PIF has a two-pronged mandate – it is also expected to develop domestic projects that will reduce Saudi Arabia’s reliance on oil. That means PIF acting as a cornerstone investor on some major hometown ventures with foreign investors expected to join in.

Projects - Zone - NEOM - Area - Size

The projects include a high-tech economic zone dubbed NEOM planned for an area close to the size of Belgium, an entertainment park outside Riyadh called Qiddiya being built on a site 2-1/2 times larger than Disney World, and a luxury tourist resort off the Red Sea coast that will span more than 90 islands.

With the exception of Six Flags , a U.S. theme park group, which signed a deal to operate at Qiddiya, no other foreign partners or investors have been publicly announced for the ventures. Six Flags did not respond to a request for comment.

Years - Projects - Risk - Funding - PIF

Now, two years after the projects were announced, there is a risk they could be delayed or scaled back if foreign funding does not materialize because PIF won’t be able to put up all the money required in the current timeframe, according to two of the sources.

PIF’s domestic responsibilities also make it more challenging for the $300 billion fund to resume its previous frenetic pace of overseas investment. It has not made any foreign investments so far this year, according to Refinitiv data.

PIF - Involvement - Capital - Impact - Projects

PIF declined to comment on the involvement of foreign capital and the impact the domestic projects could have on its plans. It said it was...
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