Saudi Arabia’s Public Investment Fund (PIF) is planning to double its technology investment with Japan’s Softbank to $90bn and fast-track the first town in $500bn mega zone NEOM to as early as next year, according to reports
PIF chairman and Saudi Crown Prince Mohammed bin Salman detailed the plans in a wide-ranging interview with Bloomberg in which he also talked of recent comments from US President Donald Trump, oil production and stalled listing plans for state oil giant Saudi Aramco.
On the SoftBank fund, the royal said he had been impressed by the returns the kingdom had received with its first $45bn investment under a wider relationship with founder Masayoshi Son.
In turn it is now planning to invest a further $45bn in a second Vision Fund SoftBank is planning, he added.
“We would not put, as PIF, another $45bn if we didn’t see huge income in the first year with the first $45bn,” he was quoted as saying.
Son had indicated at the PIF’s Future Investment Initiative conference last October that SoftBank’s Vision Fund had made a return of more than 20 per cent in its first five months. It now has $65bn of its capital committed in companies including Uber, WeWork, Slack Technologies and GM Cruise.
Based on this performance and an expected windfall of $170bn from the PIF’s sale of its stake in SABIC to Saudi Aramco and Aramco’s subsequent IPO, the crown prince is targeting $600bn of assets for the PIF by 2020.
“We are now above $300bn, we’re getting close to $400bn,” he said. “Our target in 2020 is around $600bn. I believe we will surpass that target in 2020.”
This compares to the estimated $223.9bn in assets the PIF was estimated to have at the start of the year, according to the Sovereign Wealth Fund Institute (SWFI).
Should it meet its target, the PIF could overtake Kuwait Investment Authority and jump from 11th to fourth in SWFI’s ranking, behind only its counterparts in Abu Dhabi, China and Norway.
Under its wider plans, the PIF raised $11bn from banks in August to support investments and help drive the kingdom’s reform agenda.
This includes the $500bn mega zone NEOM, which is expected to span 26,500sqm and act as a technology hub, job creator and centre for foreign investment.
The crown prince said the master plan spanned 12 small cities or towns next to the sea and six or seven elsewhere as well as a huge industrial zone, port and three-to-four airports.
He indicated first town in an area called the Neom Riviera will be ready by 2020.
“I am pushing to have it in 2019, I don’t know if I will succeed in that,” he explained.
“After that, we will have from two to three new towns in Neom every year. Neom city will be completed in 2025.”
Currently the only structures in NEOM are believed to be part of a palace complex built for monarch King Salman.
Reuters reported last month that troubled construction firm Saudi Binladin had diverted ‘tens of thousands’ of workers to the project to complete it in time for a holiday the kingdom’s ruler took in late July.
Mohammed bin Salman revealed that a new investor would be making an announcement regarding the NEOM project in February, subject to final approval, but refused to disclose more details.