What is Saudi Sovereign Wealth Fund?

What is Saudi Sovereign Wealth Fund?

Behind the head-turning news this week that the PGA Tour is looking to merge with a Saudi rival called LIV Golf is an entity with billions of dollars to back the deal: Saudi Arabia’s Sovereign Wealth Fund.

Although the fund has long been a major presence in financial circles, the deal that stunned the world of golf has shed a sleazy light on Saudi business that has been described as One of the most opaque in the world.

Here’s what to know about Saudi funds.

Is known public investment fundor PIF, it is an investment pool that manages over $700 billion in Saudi government funds.

It invests those funds in companies, real estate and other ventures both domestically and globally to generate profits ostensibly for the benefit of the Saudi economy.

The fund, established by royal decree in 1971, is headquartered in Riyadh, Saudi Arabia, and has offices in Hong Kong, London and New York. The PIF has grown rapidly in recent years, funding ambitious tourism and commercial ventures it calls the “Giga Project”.

It’s not the biggest in the world: that would be Norway, which currently manages $1.4 trillion. sovereign wealth fund institute,

The PIF is headed by a governor, Yasir al-Rumayyan, a onetime banker and chairman of Saudi Aramco, the country’s national oil company. It also hosts the annual conference “Davos in the Desert” in Riyadh.

But analysts say the real power behind the purse strings is Saudi Arabia’s de facto leader, Crown Prince Mohammed bin Salman, who chairs the board of the Public Investment Fund.

Prince Mohammed has made the fund a cornerstone of his economic development plan, Vision 2030, a blueprint for weaning Saudi Arabia from dependence on petrowealth and expanding its economy into technology, health care and other sectors.

The scheme aims to create private sector jobs for the state’s large youth population, while allowing new freedom for women. The 37-year-old crown prince has also set a target of increasing the Public Investment Fund’s assets to $3 trillion by 2030.

Under Prince Mohammed, the fund has invested in a range of international companies, including Uber, private-equity firm Blackstone, Japanese conglomerate SoftBank and sports franchises such as English Premier League soccer team Newcastle United.

The name is backing a futuristic city in the Saudi desert Neomannounced a new airline, Riyadh Air, this year with the purchase of 72 Boeing Dreamliners, and said it was committed to a “green” strategy.

LIV Golf is merging with the PGA Tour and the DP World Tour, a European golf circuit, in hopes of creating a global giant in the sport, the public investment fund said on Tuesday.

The word “shock” is being thrown around a lot.

For one thing, some key people were left out of the talks, which were secret. Golf fans certainly didn’t see this coming either.

But many in Saudi circles were happy to see it as a counter-narrative against a stream of negative press. Prince Talal Al Faisal, a Saudi businessman and member of the royal family, said in an interview, “I will not lie: this is a moment we are enjoying very much.”

When the LIV Tour launched in 2021, bankrolled by sovereign wealth funds, it marked a sharp break from golf’s traditional mores – and immediately divided the world of men’s professional golf.

This was seen as a separate league and a threat to the PGA Tour. This lured golf stars such as Phil Mickelson (with a reported $200 million) to become frontman. The PGA Tour gained momentum by increasing its payouts.

Big stars like Tiger Woods had harsh words for the new league and for Greg Norman, who as its commissioner became the western face of the LIV. With the poaching of some of the most widely known players on the PGA Tour established by LIV, the PGA banished them.

Secret meetings possibly sweetened with promised money.

Mr. Al-Rumayyan, a close confidante of Prince Mohammed, has led talks with PGA Tour commissioner Jay Monahan over the past month and a half.

“I recognize that people are going to call me a hypocrite,” Mr Monahan said after the announcement. “But circumstances change.”

The new league, the sovereign fund, the Saudi government and the royal family have all been tainted with the taint of scandal at one point or another.

The birth of LIV prompted litigation with the PGA Tour, and later an investigation by Justice Department antitrust investigators, who were probing whether the tour’s efforts to block LIV had undermined golf’s labor market. .

Saudi investment funds have raised eyebrows by handing over billions of dollars to former Trump administration officials, including former President Donald J. including an investment firm run by Trump’s son-in-law Jared Kushner; and the other is run by former Treasury Secretary Steven Mnuchin.

It has invested in Russian infrastructure. And according to Turkish security officials, the killers of dissident Saudi writer Jamal Khashoggi were accused of having a role in procuring the plane that took them to Turkey, where he was killed and his body cut into pieces. A US intelligence report stated that the Saudi Crown Prince had approved the assassination.

The Saudi government has locked up women who campaigned for freedom to drive and detained senior royal family members in what critics see as part of a consolidation and shakedown of power. Saudi Arabia has also played a proxy role in devastating conflicts in places like Yemen, where a Saudi-led coalition has been fighting Iran-backed Houthi rebels since 2015.

Experts say that if the deal sticks, it has the potential to reshape golf as we know it.

Most of the terms of the deal were not disclosed, and it may still come under scrutiny from international regulators and the PGA Tour’s board, which would have to approve it.

Under the settlement announced Tuesday, litigation between the former rivals will disappear like a golf ball in tall grass. The fate of the antitrust investigation is not as clear.

The plan is for Mr. Al-Rumayyan to lead the board of the new for-profit entity. (He was previously a board member at Uber and SoftBank Group.)

In an interview on Saudi Arabia’s podcast “Socrates” last year, Mr Al-Rumayyan expressed his love for golf – “it’s a really enjoyable sport, one of the best sports” – and the Public Investment Fund. Praised the goals of the Crown Prince for .

“We have a whole plan from here till 2030, how do we get to the first trillion, then how do we get to two to three” trillion, he said. “Crown Prince Pushing for $3 Trillion.”

Christian Coates Ulrichsen, Middle East fellow at Rice University’s Baker Institute for Public Policy, called the deal brokered by Prince Mohammed “highly strategic”. He added that it “reaches out to a part of Central America, well beyond the Beltway, and connects with them to tell the story of a truly changing Saudi Arabia.”

message, he said? “This is not the Saudi Arabia you thought you knew based on 9/11 or Khashoggi or Yemen.”

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