Saudi Arabia's PIF and Oman Investment Authority sign investment pact

Partnership builds on establishment of PIF subsidiary Saudi Omani Investment Company, which plans investment in 'promising sectors in Oman'

The PIF and OIA pact aims to expand investment in Oman's rapidly growing economy. Photo: PIF

Saudi Arabia's Public Investment Fund has signed a preliminary agreement with Oman's sovereign wealth fund, Oman Investment Authority (OIA), to explore investment opportunities worth as much as $5 billion in the sultanate.

The deal allows greater co-operation between the two bodies and will help broaden the scope of investment in Oman’s rapidly growing economy, the funds said in a joint statement on Thursday.

The pact “represents a significant milestone in PIF’s and OIA’s strategic partnership”, building on the recent establishment of Saudi Omani Investment Company (SOIC), a company wholly owned by the PIF.

SOIC, which intends to invest up to $5 billion in “promising sectors in Oman”, closed its first investment in the sultanate as a 20 per cent anchor investor in Abraj Energy Services’ initial public offering.

The company continues to seek other investment opportunities with OIA and its companies, the two bodies said.

“This MoU [memorandum of understanding] is an important step in further strengthening the relationship between PIF and OIA to expand investment and co-operation in the fast-growing Omani economy,” said Yazeed Al Humied, deputy governor and head of Middle East and North Africa investments at PIF.

“PIF aims to create long-term strategic partnerships in the region that support the creation of sustainable returns, deliver value to local economies, maximise PIF’s assets and diversify the Saudi Arabian economy in line with Vision 2030.”

Saudi Arbia, the biggest Arab economy and Opec’s top oil exporter, has stepped up investments after the Covid-19 pandemic as Riyadh continues to push for economic diversification.

PIF, which invests on behalf of the government in domestic and international markets, is at the heart of the kingdom's efforts to steer its economy away from hydrocarbons.

The fund, which is mandated to pump $40 billion to $50 billion into the domestic economy alone, plans to investment as much 90 billion Saudi riyals ($24 billion) in the broader Mena region to expand its portfolio of assets and boost regional economic growth.

In October, PIF said it was setting up five investment companies after the launch of the Saudi Egyptian Investment Company in August.

The investment vehicles will seek opportunities in Bahrain, Iraq, Jordan, Oman and Sudan, Crown Prince Mohammed bin Salman said at the time.

Together, the six companies will invest in key sectors including infrastructure, property development, mining, health care, financial services, food and agriculture, manufacturing, telecoms, technology and other industries.

OIA’s latest partnership with PIF will “open up opportunities for the private sector in both countries, in alignment with OIA’s efforts to attract FDI [foreign direct investment] to the sultanate through Oman’s 2040 vision", said Mulhem Al Jarf, deputy president for investment at OIA.

Oman, one of the smaller GCC economies, launched a three-year fiscal stability programme in October to add to the momentum of the sultanate’s economic recovery from the pandemic-driven slowdown.

Launched by Oman's Sultan Haitham, the programme is focused on boosting the development of its financial sector and attracting FDI into the country.

The sultanate has also signed agreements with its GCC neighbours to boost its economy and create jobs, including a $3 billion railway network with the UAE and a $320 million infrastructure development project with the Saudi Fund for Development.