Saudi PIF invests in shares amid oil collapse
During the crisis in the oil segment, the Saudi Fund PIF decided to invest in oil industry companies. According to a reputable publication, it acquired shares in European fuel producers. The total amount of the purchase was $1 billion.
A few weeks ago, the Public Investment Fund, which belongs to the royal family, bought the securities of the oil company Royal Dutch Shell. The latter is a joint project of British and Dutch corporations. In addition, the fund invested in the Norwegian manufacturer Equinor, Eni from Italy and Total from France. However, experts say that saudits will not limit themselves to these acquisitions and it is worth waiting for new investments in the near future.
PIF now has more than 14 million shares of the company from Norway, which is 3.4% of the total Equinor assets. The amount of the deal is estimated at $200 million.
The fund has invested less in other companies. Royal Dutch Shell bought 2.17% of securities, French Total – 1.87%, Italian Eni – 0.49%.
Decrease in oil quotations played into the hands of Saudi Arabia. The coronavirus pandemic paralyzed industry in many countries, as a result of which demand for raw materials fell, leading to a collapse of prices to critical lows.
According to statistics, since the beginning of last year Equinor shares have fallen in price by 23%, Royal Dutch Shell securities lost 35%, Total assets dropped by 31% and Eni – by 33%. The Brent oil itself fell by 52% this year.
The PIF investment fund in Saudi Arabia was established in 1971. The purpose of its creation is to support the economy of the kingdom.
In 2016, the Crown Prince announced a new development strategy Saudi Vision-2030, in which PIF will play a major role. He will be the largest sovereign fund in the world, whose assets will exceed $2 trillion. Investments will be extended to other countries. The company already has various projects in the U.S., Russia, and EU countries, and the acquisition of shares in oil companies is the implementation of this strategy.
The goal of Vision 2030 is primarily to reform Saudi Arabia’s economy in order to reduce its dependence on oil. It is gradually changing the sources of income of the kingdom, realizing its potential not only in terms of production of raw materials, but also in other areas that are relevant today.
Vision 2030 changes not only the economic processes within the kingdom, but also opens it up to other states. Despite the fact that Saudi Arabia is considered a strict Muslim country, amazing metamorphoses occur here. It has become accessible to tourists, expanded rights for girls, actively created infrastructure, developing hotel and resort businesses.
