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What Is the Saudi Sovereign Wealth Fund?


Behind crazy news This week the PGA Tour wants to merge with emerging Saudi rival LIV Golf as an entity with billions of dollars to back the deal: Saudi Arabia’s sovereign wealth fund.

Although the fund has long had an overwhelming presence in the financial world, the deal that stun the golf world shed light on Klieg for an Arab business described as one of the most opaque places in the world.

Here’s what to know about the Saudi fund.

Known as public investment fundor PIF, this is an investment fund that manages more than $700 billion of Saudi government money.

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

The Foundation, established in 1971 by royal decree, has its headquarters in Riyadh, Saudi Arabia, and offices in Hong Kong, London and New York. PIFs have grown rapidly in recent years, funding ambitious commercial and tourism projects they call “major projects”.

It’s not the biggest in the world: That would be Norway’s, currently managing $1.4 trillion, according to Sovereign Wealth Fund Institute.

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

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

Prince Mohammed has made the fund a cornerstone of his economic growth plan, Vision 2030, a blueprint that aims to eliminate Saudi Arabia’s dependence on oil assets and expand the economy. economy to technology, healthcare and other sectors.

The plan is to create jobs in the private sector for the kingdom’s large youth workforce, and to allow new freedom for women. The 37-year-old crown prince also aims to increase the assets of the Public Investment Fund to $3 trillion by 2030.

Under Prince Mohammed, the fund has invested in a range of international companies, including Uber, private equity firm Blackstone, Japan’s SoftBank and sports franchise like the English Premier League football team Newcastle United.

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

On Tuesday, the Public Investment Fund said LIV Golf is merging with the PGA Tour and DP World Tour, a European golf circuit, in the hope of creating a global giant in the sport.

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

However, some key players have been excluded from the negotiations, it is a secret. Golf fans certainly don’t see that happening either.

But many in Saudi circles ecstatic, see it as a counter-story against negative press. “I won’t lie: This is a moment that so many of us are enjoying,” Prince Talal Al Faisal, a Saudi businessman and member of the royal family, said in an interview. .

When the LIV tour kicks off in 2021, funded by the national wealth fundit marked a dramatic break from the traditional practices of golf — and instantly divided the world of men’s professional golf.

It is considered a breakaway tournament and a threat to the PGA Tour. It attracted golfing stars like Phil Mickelson (with a reported $200 million) as the frontrunners. PGA Tour scrambles to catch up by increasing payout.

Bigger stars like Tiger Woods have had harsh words for the new league and for Greg Norman, who has become the Western face of LIV as its commissioner. With LIV poaching some of the most widely known players from the established PGA Tour, The PGA expelled them.

In silent meetings perhaps sweetened by promised wealth.

Mr. al-Rumayyan, a close confidant of Prince Mohammed, has been leading negotiations for more than a month and a half with PGA Tour commissioner Jay Monahan.

“I realized that people would call me a hypocrite,” Mr Monahan said after the announcement. “But circumstances have changed.”

The new federation, the sovereign fund, the Saudi government and the royal family have all been tainted at some point with a scandal.

The introduction of LIV prompted litigation with the PGA Tour, and the latter has arrived under the supervision of the Justice Department’s antitrust investigatorswho are examining whether the league’s efforts to prevent LIV will weaken golf’s labor market.

The Saudi investment fund made headlines by entrusting billions of dollars to former Trump administration officials, including an investment firm run by Jared Kushner, son-in-law of former President Donald J. Trump; and another run by former Treasury Secretary Steven Mnuchin.

It has invested in Russian infrastructure. And it allegedly played a role in buying the plane that carried the killers of Saudi dissident writer Jamal Khashoggi to Turkey, where he was killed and his body was cut into pieces, according to Turkish security officials. A US intelligence report says the crown prince of Saudi Arabia approved the assassination.

The Saudi government has locked up women campaigning for the freedom to drive and detained high-ranking royals in what critics see as a consolidation of power and shake-up. Saudi Arabia also plays a proxy role in devastating conflicts in places like Yemen, where the Saudi-led coalition has been fighting the Iran-backed Houthi rebels since then. since 2015.

If the deal is successful, experts say, it has the potential to reshape golf as we know it.

Most of the terms of the deal were not disclosed and it is likely to remain under scrutiny from international regulators and the PGA Tour’s board of directors, who must approve it. .

Under the agreement announced on Tuesday, litigation between former rivals will disappear like a golf ball in tall grass. The fate of the antitrust investigation is unclear.

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

In an interview on Saudi Arabia’s “Socrates” podcast last year, al-Rumayyan expressed his love of golf – “it’s a really fun sport, one of those sports. best” — and praised the crown prince’s goals for the Public Investment Fund. .

“We have a full plan from here to 2030, how we get to the first trillion, then how we get to two to three trillion,” he said. “The Crown Prince is insisting on $3 trillion.”

Kristian Coates Ulrichsen, a Middle East fellow at Rice University’s Baker Institute for Public Policy, called the deal “highly strategic” by Prince Mohammed. He said it “reaches a part of Central America, beyond the Belt, and really engages with them to tell the story of a changing Saudi Arabia.”

Message, he said? “This is not the Saudi Arabia you think you know based on 911 or Khashoggi or Yemen.”

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