Saudi Arabia's PIF raises $17bn term loan for corporate purposes

The facility was self-arranged with 25 banks globally across Europe, the US, the Middle East and Asia

The Riyadh skyline. PIF is one of the world’s largest sovereign wealth funds, with about $620 billion in assets under management. EPA
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Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), secured a $17 billion, seven-year senior unsecured term loan as it seeks to diversify its debt funding sources.

It represents the largest self-arranged term loan raised for general corporate purposes, the PIF said in a statement on Wednesday.

The loan, which was twice oversubscribed, recorded significant demand from an international syndicate and reflects PIF’s strategy to diversify its sources of funding, helping to drive investment in Saudi Arabia and internationally, the statement said.

PIF’s existing $11 billion, five-year loan, arranged in 2018, will be repaid early, it added.

“This new facility is a strong endorsement of PIF’s medium-term capital raising strategy,” said Fahad Al Saif, the fund's head of global capital finance division.

“It is a significant achievement for PIF, raising a record-sized term facility in the longest tenor ever for a loan of its size that is subscribed to by an unprecedentedly diversified number of lenders. PIF will continue to explore a variety of debt funding sources as it delivers on its strategic objectives.”

PIF is one of the world’s largest sovereign wealth funds, with about $620 billion in assets under management.

Under a five-year strategy announced last year, the PIF aims to more than double the value of its assets under management to $1.07 trillion and commit $40 billion annually to develop Saudi Arabia's economy until 2025.

The sovereign wealth fund is at the heart of the Saudi Vision 2030 initiative to diversify the kingdom’s economy and reduce its reliance on hydrocarbons.

PIF has created 10 new sectors, set up more than 30 new companies, created 331,000 jobs in Saudi Arabia and more than tripled its assets in the past few years.

Under its five-year plan, it will focus on 13 sectors as part of its core domestic strategy.

This new facility is a strong endorsement of PIF’s medium-term capital raising strategy
Fahad Al Saif, head of global capital finance division, PIF

The loan transaction was supported by a global syndicate of 25 financial institutions from Europe, the US, the Middle East and Asia, the PIF said.

The fund’s $11 billion loan facility in 2018 saw 15 financial institutions participate.

The new loan forms part of PIF’s medium-term capital raising strategy and its 2022 annual capital raising plan, which includes many funding tools that will ensure PIF’s access to diverse funding sources, including public and private, it said.

“The PIF has a long-term financing strategy built around four sources of funding,” said the statement.

“These sources include capital injections by the government, government asset transfers to PIF, retained earnings from investments, and loans and debt instruments.”

The fund, chaired by Crown Prince Mohammed bin Salman, has stakes in global companies including ride-hailing company Uber and is a cornerstone investor in SoftBank’s Vision Fund that invests in global technology companies.

Last month, the PIF said it plans to invest 90 billion ($24 billion) Saudi riyals in the broader Middle East and North Africa region to expand its portfolio of assets and boost regional economies.

Saudi Arabia's sovereign wealth fund also increased the size of its investments in Meta, the parent company of Facebook and Instagram, as well as Google parent Alphabet in the third quarter.

It also bought new stakes in Linde, the world's largest industrial gas company by market share and revenue, and blank cheque company Compute Health during the same period.

The PIF's largest investment remains in electric car company Lucid and is worth about $14.2 billion.

Lucid went public in July 2021 and plans to produce 155,000 cars a year at its new facility in Saudi Arabia, boosting its global production capacity to 500,000 EVs per year in the coming years.

Updated: November 30, 2022, 2:27 PM