The Wall Street Journal has revealed in a new report issued this week that Saudi Crown Prince Mohammed bin Salman (MBS) has vexed financial officials at times as he pushes pet projects on the Public Investment Fund, including a deal with Jared Kushner
As the Covid-19 pandemic sent global markets swooning in early 2020, MBS pressed the country’s sovereign-wealth fund to go on an international stock-buying spree.
According to the report, the board of the Public Investment Fund, or PIF, resisted the move as too risky, but soon found itself overruled by an even higher authority, Prince Mohammed’s father, King Salman.
The Public investment fund eventually deployed $35 billion and quickly turned that into 49 billion when markets rallied.
That is according to recent comments by PIF, governor Yasir Al-Rumayyan.
But behind the scenes, the episode escalated a power struggle about how the wealth fund is run and who calls the shots, a difference of opinion that exists until this day.
And so that essentially gets to the chorus of controversy there, which is that on the one side you had Crown Prince wanting to take advantage of a moment, but there were technocrats saying, “Hey, this might be a little bit too risky because the money that the Crown Prince use to go investing in stocks actually came from the Central Bank.
The Saudi Central Bank keeps a load of cash on hand, essentially to help manage the currencies pegged to the dollar. All of the Saudi government revenues are in dollars because it sells a lot of oil in dollars. And so there was just a lot of concern that going to the Central Bank and taking some of the money there to go and investing might destabilize the broader financial system in Saudi Arabia.
The PIF is central to the Crown Prince’s vision to transform his country. He wants to transform it, not just economically and make sure that it’s no longer dependent on oil sales, he wants to change the country socially.
And a lot of what PIF is investing in, whether it’s tech companies or entertainment companies, is about driving that change both economically and socially.
The fund also wants to become one of the biggest, if not the biggest sovereign wealth fund in the world. It’s currently about $600 billion in assets under management, and wants to get to two trillion by 2030.
