Saudi Arabia’s PIF announced these 5 projects in October

Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), has been active since it moved to the forefront of the Kingdom’s economic reform plan in 2015 and its management was handed to the Council of Economic Development Affairs, chaired by Crown Prince Mohammad bin Salman. The fund has stepped up its investment drive this month, announcing a number of new deals.

Ahead of the PIF-backed Future Investment Initiative that starts in Riyadh tomorrow, Argaam takes a look at plans unveiled by the mega-fund in October.

1) Development companies for Holy Mosques expansions

On Oct. 2 PIF launched two development companies – Rou’a Al Haram and Rou’a Al Madinah – in a bid to support religious tourism growth in the country. Rou’a Al Haram aims to develop areas around the Grand Mosque in Makkah, adding 115 buildings with an estimated hotel capacity of 310,000 guests per day. An estimated yearly contribution to GDP of SAR 8 billion is expected from this project once complete.

Rou’a Al Madinah will develop areas near the Prophet’s Mosque, boosting hotel capacity by 240,000 guests. The company would likely contribute SAR 7 billion to Saudi Arabia’s annual GDP. Construction work under both firms is scheduled to start in 2018.

2) Fund of Funds

The PIF established the Fund of Funds on Oct. 9. The new investment vehicle is designed to provide small and medium-sized enterprises (SMEs) access to capital by investing in venture capital and private equity funds targeting the SME sector. The Fund of Funds, with a capital of SAR 4 billion, is also a means to support the private equity and venture capital ecosystem in the Kingdom. “The Fund of Funds’ vital role will be reflected in its contributions to national GDP, estimated to be around SAR 400 million by the end of 2020,” the PIF said.

3) Recycling company

The Saudi Recycling Company will invest in projects designed to increase recycling operations by establishing alliances with specialized private sector companies. It will cover all kinds of recyclable materials across the Kingdom and value chain stages, a statement on the official Saudi Press Agency said.

4) Energy efficiency firm

The National Energy Efficiency Services Co. was established earlier this month, with a capital of SAR 1.9 billion and the aim to increase the energy efficiency of buildings and government facilities in the Kingdom. The firm will finance and manage the retrofit of state buildings and facilities, which account for about 70 percent of total projects in this field. It will also offer new investment opportunities through public-private partnerships.

5) Mortgage refinancing company

PIF set up a mortgage refinancing company to boost Saudi home ownership, with plans to provide the ministry of housing with SAR 75 billion in refinancing over the next five years, reaching up to SAR 170 billion by 2026. The Saudi Mortgage Refinancing Company will acquire mortgage portfolios, issue mortgage-backed securities and offer direct and indirect refinancing.

Write to Nadeshda Zareen at nadeshda.zareen@argaamplus.com