What Is a PIF? Explaining the Public Investment Fund
Discover the Public Investment Fund (PIF): a major sovereign wealth fund, its global impact, and strategic role in economic transformation.
The Public Investment Fund (PIF) is Saudi Arabia’s sovereign wealth fund, playing a significant role in the global financial landscape. As one of the largest funds of its kind, the PIF’s activities extend across diverse sectors, influencing economic development within Saudi Arabia and globally. Its strategic direction aligns with national economic objectives, positioning it as a key entity in the transformation of the Saudi economy.
Understanding the Public Investment Fund
A sovereign wealth fund is a state-owned investment vehicle, typically funded by government capital from surplus national reserves. These funds are managed to achieve long-term financial objectives for the country. They serve various purposes, including economic stabilization, intergenerational savings, and national development. They aim to generate financial returns while also supporting broader economic goals.
The Public Investment Fund was established in 1971. Its initial mandate focused on providing financial support for projects strategically important to the national economy. The fund’s role evolved, and in 2014, its scope expanded significantly, granting it authority to finance and establish new companies independently or in collaboration with public and private sector entities.
In 2015, oversight of the PIF transitioned from the Ministry of Finance to the Council of Economic and Development Affairs (CEDA). This change placed the fund under the direct chairmanship of Crown Prince Mohammed bin Salman. The PIF has grown to become one of the world’s largest sovereign wealth funds, with assets under management reaching $913 billion in 2024, marking a 19% increase from the previous year. Some reports indicate its assets surpassed $1 trillion in 2024, reaching $1.15 trillion, positioning it as the fourth largest globally.
The Fund’s Core Objectives
The Public Investment Fund operates to maximize sustainable returns while contributing to Saudi Arabia’s economic development and diversification. Its strategic objectives integrate with Vision 2030, the Kingdom’s plan to reduce reliance on oil revenues. This involves fostering growth in non-oil sectors and transforming the national economy.
A significant goal of the PIF is to enhance Saudi Arabia’s non-oil Gross Domestic Product (GDP). The fund’s cumulative contribution to non-oil GDP between 2021 and 2024 reached $243 billion, now accounting for 10% of the Kingdom’s non-oil economy. The PIF aims to increase this contribution to approximately SAR 1.2 trillion (around $320 billion) by the end of 2025.
The fund is a driver of job creation within the Kingdom. It targets generating 1.8 million direct and indirect jobs by 2025, having created over 730,000 employment opportunities. The PIF is instrumental in establishing and developing new strategic sectors and industries, including localizing advanced technologies and knowledge within Saudi Arabia.
Key Investment Approaches and Assets
The Public Investment Fund employs a long-term investment strategy, balancing financial returns with national development objectives. Its portfolio is diversified across various sectors and geographies to mitigate risks and optimize performance. The fund’s investments are channeled through multiple portfolios, addressing both domestic and global priorities.
Domestically, the PIF focuses on investments in local companies, including both listed and non-listed entities. Over 60% of its activities are directed within Saudi Arabia. The fund is a primary investor in the Kingdom’s mega-projects, such as NEOM, The Red Sea Project, and Qiddiya, which stimulate economic growth and create employment. Between 2017 and 2024, the PIF established 93 companies across 13 strategic sectors, managing 225 portfolio companies by the end of 2024.
Internationally, the PIF maintains global strategic investments and targets emerging markets to diversify its asset base. Its international portfolio includes significant stakes in global companies across technology, entertainment, renewable energy, and financial services. Examples include investments in Uber, the SoftBank Vision Fund, LIV Golf, and Newcastle United Football Club. The fund aims to increase its international assets from 10% to 50% of its portfolio by 2030. Funding comes from various sources, including cash from the Saudi Central Bank, issued debt, and proceeds from the privatization of Saudi state assets.
Management and Structure
The Public Investment Fund is governed under the oversight of the Council of Economic and Development Affairs (CEDA), which provides strategic direction. The Chairman of the PIF is Crown Prince Mohammed bin Salman. Day-to-day operations and investment strategies are led by the Governor, Yasir Al-Rumayyan.
The PIF operates as an independent financial entity with public legal status, granting it financial and administrative autonomy. The fund’s board of directors includes various government ministers, such as the Minister of Finance, Minister of Commerce, and Minister of Investment. Key internal roles, such as the Head of International Investments and the Head of Compliance and Governance, manage the fund’s diverse activities and ensure adherence to regulatory standards.