RIYADH: The Saudi Public Investment Fund maintained its leading position in the Middle East and climbed five places to joint second in the ranking of the 100 national wealth institutions, according to a statement.
The 2024 Governance, Sustainability and Resilience Scoreboard, published by the Global SWF data platform, shows that the Kingdom fund improved its assessment score to an impressive 96 per cent from 92 per cent the previous year.
Moreover, PIF has achieved the highest position in the world in terms of investing new capital over the last five and a half years.
The GSR Assessment Tool takes into account key factors such as transparency and accountability, impact and responsible investing, as well as legality and long-term sustainability.
The scoring system consists of 25 separate items: 10 for governance, 10 for sustainability, and five for resilience. Each item is answered with a binary response, given equal weight, and converted into percentage points.
“The presence of the Saudi sovereign wealth fund is evidence of the efforts made by some Middle Eastern funds to promote best practices in the region,” the agency commented.
Chad Richard, PIF’s Head of Strategy Development and Innovation, said: “The report reinforces PIF’s position as one of the world’s leading, influential and responsible investors with world-class governance and sustainability practices.”
According to Richard, the Saudi National Wealth Fund has been at the forefront of promoting the global transition to clean energy, having conducted the world’s largest voluntary carbon credit auctions, selling 3.6 million credits to international companies.
PIF also pioneered the issuance of green bonds, including the first-ever centennial green bond, worth a total of $8.5 billion, and was the first fund in the region to commit to achieving net zero emissions by 2050.
These activities underline PIF’s commitment to investing in a cleaner and greener economy and supporting sustainable growth at home and globally.
In 2024, state-owned investors face a challenging environment of volatility and uncertainty. The report noted that despite this, global stocks experienced strong growth in the first half of the year, with the S&P 500 and Nasdaq reaching record highs on June 18.
The S&P 1200 Global Index also posted significant gains of 11.6 percent year to date. Bonds and hedge funds posted more modest gains of 0.5 percent and 5.5 percent, respectively.
Private markets, including private equity and infrastructure, saw moderate gains, while real estate fell 5.5 percent compared to December 2023.
Geopolitically, conflicts in Ukraine and Palestine, as well as tensions between China and the US, continue. Oil prices remain high at $83 a barrel, benefiting sovereign wealth funds from oil-rich economies.
“Investment in the first half of 2024 is again led by the Oil Five – Saudi PIF, Abu Dhabi ADIA, Mubadala and ADQ, and Qatar’s QIA, which invested $38 billion across 56 different deals. This amount is more than twice what Maple Eight – the largest Canadian funds – invested, and almost eight times what Singapore funds spent,” the report said.
Middle East funds have seen a significant improvement in global sustainability rankings, increasing their share from 32 per cent in 2020 to 48 per cent in 2024, despite the introduction of more stringent sustainability criteria this year.
The report highlighted that among the 22 Gulf Cooperation Council (GCC) funds, PIF continues to be the leader and has come a long way, increasing its score from 28 percent in 2020 to 96 percent currently.
It was also mentioned that the Saudi fund voluntarily publishes an allocation and impact report and conducts self-assessments based on the Santiago Principles, even though it is not a member of the International Forum of Sovereign Wealth Funds.
Abu Dhabi’s Mubadala is following a similar path and plans to publish its first annual impact report in the second half of 2024.
According to Global SWF, sovereign wealth funds and public pension funds have reached record highs in assets under management. SWFs manage over $12 trillion, while PPFs oversee over $24 trillion, reflecting solid financial performance and growth above 2021 levels.
In the first half of 2024, sovereign investors participated in 27 mega-deals, each valued at more than $1 billion in investments or divestitures, the report added. Significantly, Saudi PIF ranked fifth, seventh and eighth among the 10 largest and most significant investments during the period.
The report says that the emphasis on SDGs at the organizational level is influencing SOIs’ investment preferences. In a significant shift, investment in green assets, mainly focused on renewable energy, outpaced investment in black assets such as oil, gas and mining for the first time in 2021. This trend continued in 2022, 2023 and the first half of 2024.
According to the report’s charts, PIF has the second-largest portfolio share among SOI funds investing in the domestic economy, at 73 percent, behind Abu Dhabi-based ADQ, which leads with 89 percent.
The Saudi fund is also distinguished by its strong penchant for direct investment in private capital and a significant focus on the domestic market.
In particular, this concerns key sectors of the Saudi economy, including sports and recreation, tourism and gaming, as well as construction and heavy industry.
It plays a key role as an economic catalyst and facilitator for the realization of the Kingdom’s Vision 2030. It is dedicated to supporting private sector growth, expanding the country’s industrial base and creating employment opportunities, as well as increasing women’s participation in the workforce, attracting foreign direct investment and developing the country’s financial markets.
PIF also posted strong financial results for 2023, with revenues reaching SR331 billion ($88.3 billion) from a diversified investment portfolio. This represents an increase of more than 100 percent compared to 2022, underlining solid returns and progress towards long-term goals in driving the Kingdom’s economic transformation.
The consolidated financial statements for 2023, prepared by KPMG, confirmed compliance with International Financial Reporting Standards and the requirements for listing on the London Stock Exchange.
PIF’s 2023 financial results underline its strong financial and investment position, receiving an A1 rating from Moody’s with a positive outlook and an A+ rating from Fitch with a stable outlook. These ratings confirm the fund’s solid financial condition and consistent performance in the global market.