Saudi Arabia tops sovereign wealth spending league with $31.5bn investment spree

Saudi Arabia’s Public Investment Fund was reformulated eight years ago by Crown Prince Mohammed Bin Salman – Anadolu Agency

Saudi Arabia’s sovereign wealth fund spent more than any other last year after splashing out $31.5bn (£24.7bn) on investments ranging from a stake in Heathrow to ownership of a US gaming company.

The Kingdom’s Public Investment Fund (PIF) has topped an annual ranking of sovereign investment fund spending, compiled by consultancy Global SWF, for the first time.

Investment by PIF accounted for just over a quarter of the $123.8bn (£97.2bn) spent in total by all of the world’s sovereign wealth funds in 2023. Saudi spending jumped by a third compared to 2022.

The Middle Eastern kingdom’s nest egg fund struck 48 deals last year, spanning a wide range of sectors as Saudi Arabia seeks to diversify its economy away from its reliance on oil.

Recent investments in Britain include buying a 49pc stake in Sir Rocco Forte’s luxury hotels group, which owns the Balmoral Hotel in Edinburgh and Brown’s in London, as well as the acquisition of a 10pc holding in Heathrow Airport.

Elsewhere, the PIF spent $4.9bn last April to buy Californian mobile game developer Scopely, while 2023 also saw it become a major shareholder in Japan’s Nintendo. The Saudi fund also bought a stake in Brazilian mining group Vale.

Saudi’s PIF has jumped from third to first in the global ranking of sovereign wealth fund spending over the last year. In 2021, it did not even feature in the top 10.

The PIF had a relatively modest presence on the global stage until it was reformulated eight years ago by Crown Prince Mohammed Bin Salman, Saudi Arabia’s de facto ruler.

The Crown Prince, who is known as MBS, has made the sovereign wealth fund central to his “Vision 2030” plan, which aims to diversify Saudi Arabia from oil as net zero leads to declining demand.

Its most famous investment spree has been in the world of sport.

Saudi’s wealth fund bought Newcastle United Football Club in 2021 and has spent heavily to attract some of the world’s most high-profile players to the Saudi Pro League.

It also set up the well-funded LIV Golf League to rival the PGA Tour, before agreeing to merge the upstart with the longer-established tournament organiser.

The Saudis have been accused of “sports washing”, a practice human rights activists say is designed to bolster Saudi Arabia’s reputation while overshadowing its totalitarian abuses.

Mr Bin Salman has acknowledged the term, saying in a Fox News interview: “I don’t care.”

He said: “If sportswashing increases my GDP by 1pc then I will continue doing sportswashing.”

As well as investments abroad, Saudi Arabia has been investing heavily in plans to reshape its domestic economy, including a scheme to spend half a trillion dollars on a new city called Neom. Planned for an area near the Red Sea, proposals include a miles-long mirrored skyscraper.

The Kingdom is spending large amounts of funds on building the futuristic megacity called Neom – AFP

Lavish spending from Saudi Arabia has come even as low oil prices have put pressure on public finances.

Riyadh reported a budget deficit of 35.8bn riyals (£7.5bn) in the three months to September, indicating that the oil price – currently at $77 per barrel – is insufficient to keep the authorities’ finances in the black.

Saudi and Russia have both pushed for tighter production limits across the Opec cartel in a bid to boost oil prices.

Globally, sovereign wealth funds manage $11.2 trillion of assets, making up just over one-fifth of the more than $50 trillion held by governments across funds, pension schemes and central banks.

The second-biggest investor of 2023 was Singapore’s GIC, which spent $20.9bn, followed by Mubadala, one of Abu Dhabi’s three sovereign wealth funds, at $17.5bn.

Abu Dhabi’s other funds, ADIA and ADQ, spent $13.2bn and $5.8bn respectively, both also making the top 10 globally.

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