Saudi Wealth Fund to Cut Back on Lending in Transformation Plan

Saudi Arabia’s Public Investment Fund is set to cut back on lending to domestic projects, which has increased by more than 80 percent over the past five years, as part of plans to transform the institution into the world’s largest sovereign wealth fund.

Loans by the PIF, as the fund is known, rose to 104 billion riyals ($27.5 billion) at the end of 2015, from 57 billion riyals at the end of 2011, according to information in Saudi Arabia’s sovereign bond prospectus. In the future, the PIF “will not act as a source of lending to the same extent that it has historically,” according to the document.

Saudi Arabia’s government plans to sell less than 5 percent of the shares in national oil company Saudi Aramco to the public and transfer ownership of the rest of the company to the PIF. The shift will give PIF assets of more than $2 trillion and will technically make investments the main source of government revenue, not oil, Deputy Crown Prince Mohammed Bin Salman told Bloomberg in March. PIF made a $3.5 billion investment in ride-hailing company Uber Technologies Inc. in June.

PIF doesn’t receive any funding through the government budget and received more than 20 billion riyals in dividends, mostly from its holdings of Saudi Arabian equities, including stakes in Saudi Basic Industries Corp. and National Commercial Bank, according to the prospectus. The fund had assets of 587 billion riyals as of June 30, up from 583 billion at the end of 2015.

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