PIF’s Lucid deal a VC success at the same time as fund isn’t amongst high 10 buyers in 2021
RIYADH: Saudi Arabia’s Public Investment Fund, often known as PIF, wasn’t amongst the high 10 international sovereign wealth funds in phrases of money deployment in 2021; nonetheless, its funding in Lucid Motors was thought-about one of the most profitable enterprise capital offers of the 12 months, in keeping with a new trade report.
The PIF “was not as active in VC as in previous years, but it scored one of the best goals of the season when Lucid Motors went public in July,” Global SWF mentioned on Saturday in its annual report on the efficiency of international sovereign wealth funds.
With a return on funding that was nearly 40 instances, “every SOI [state-owned investors] should aspire to replicate the success of PIF with Lucid Motors…even if 90 percent of startups are doomed to fail,” Global SWF mentioned.
PIF invested $1.3 billion for 63 % of Lucid in 2018, when the startup was working quick of cash. “Three years later, the stake is worth $41 billion, and the transaction showcases the competitive advantage of sovereign wealth funds when it comes to venture capital investing, thanks to liquidity and long-term horizon,” it added in the report.
This part comprises related reference factors, positioned in (Opinion area)
Top 10 SWFs
The Saudi sovereign wealth fund, which plans to be amongst the largest globally in phrases of belongings beneath administration by 2030, was amongst the high 10 SOIs in 2020 when it invested $7.9 billion, in keeping with Global SWF. It assesses funds based mostly on funding offers which can be non-public market transactions with some public offers which can be sizable and long-term in nature. Global SWF did not embody funding in home growth equivalent to NEOM in Saudi Arabia, or any switch of belongings from governments to those funds.
Global SWF report confirmed that the PIF was ranked the high fund globally for two years in a row when it invested $61.2 billion in 2016 and $31.4 billion in 2017, as these have been the years when it invested in massive schemes equivalent to Softbank Vision Fund I and the Blackstone Infra Fund.
The Fund’s presence on the world stage has grown because it invests in varied international markets, which contributes to diversifying sources of earnings and bringing worldwide experience to the Kingdom.
Firms to see funding embody Lucid Motors, with about $2.9 billion, bringing international buyers at its preliminary public providing itemizing in July 2021, making it one of the most important corporations in the electrical automobile sector. The firm’s worth has risen from $3 billion to $65 billion.
PIF additionally ploughed $2.8 billion into Indian corporations, equivalent to the cell community operator Jio Platforms and the conglomerate Reliance.
Saudi Arabia’s sovereign wealth fund is on observe to surpass its goal for the second quarter of 2022, and attain SR1.8 trillion ($480 billion) in belongings beneath administration, the fund’s Governor Yasir Al-Rumayyan mentioned final month.
The Riyadh-based PIF, is taken into account a key participant in the Kingdom’s diversification technique, notably in attaining the Vision 2030 targets.
Global outlook
Assets held by the world’s sovereign wealth and public pension funds rose to a file $31.9 trillion in 2021 because of rising U.S. inventory and oil costs, and investments rose to their highest for a number of years, Global SWF report confirmed.
The report on state-owned funding discovered that the belongings managed by sovereign wealth funds rose 6 % over the 12 months to $10.5 trillion, whereas these of public pension funds jumped 9 % to $21.4 trillion.
The report additionally discovered that state-owned buyers had deployed more cash, each in quantity of offers and by quantity, than in any of the earlier six years. Some $215.6 billion was spent, nearly half of it by sovereign wealth funds.
Singapore’s GIC sovereign wealth fund topped the league, rising its dealmaking by 75 % to $31.1 billion, unfold throughout 109 offers. Over a third of that capital was invested in actual property, particularly logistics.
Overall, rising markets fell behind, attracting solely 23 % of the capital this 12 months, one of the lowest figures in the final six years, Diego Lopez at Global SWF wrote in the report.
Venture capital investments make up solely a small slice of funds deployed by state-owned autos general, however grew by greater than 80% this 12 months to $18.2 billion, with Singapore’s Temasek accounting for greater than a quarter.
The annual report by Global SWF analyzed knowledge from 161 sovereign wealth funds and 275 public pension funds.
(With Reuters)