On the basis of soaring oil prices, Saudi Arabia, a leading member of the Organization of Petroleum Exporting Countries (OPEC), invested $7.5 billion in blue-chip American corporations through its Sovereign Wealth Fund (SWF).
In the three months ending June 30, according to U.S. securities filings, the government invested large amounts of extra cash and acquired minority shares in 17 firms, including Microsoft Corp., Alphabet Inc., the parent company of Google, and BlackRock Inc. According to the documents, each investment was worth between $400 million and $500 million.
The nation also invested in companies like JPMorgan Chase & Co. and Amazon. Additionally, the $620 billion Public Investment Fund increased its stakes in PayPal Holdings Inc., Electronic Arts Inc., and Facebook Inc.’s owner Meta Platforms Inc. The acquisitions show that the PIF, as the fund is known, is doubling down on its bet on technology investments despite a rout in valuations.
In contrast, Nigeria has not been able to take advantage of the rising international oil prices, due mainly to its over 700,000 barrels daily production deficit and its largely opaque fuel subsidy regime, estimated to cost N4 trillion this year.
By dropping from $35.37 million in June to $376,655 in July, the Excess Crude Account (ECA) shockingly depleted what would have been a veritable cushion at this exceptional time.
The Nigeria Sovereign Investment Authority (NSIA) is statutorily mandated to invest the monies in the benefit of Nigerians, whereas the ECA is the savings account for differentials between budgeted oil prices and the surplus it is sold for.
However, the PIF, led by Crown Prince Mohammed bin Salman, is actively investing in public markets in an effort to more than double its assets by 2025.
As Saudi Arabia’s profits from oil nearly quadrupled in the second quarter, the wealth fund is increasing its investments in stocks. Increasing crude prices will give the kingdom its first budget surplus in almost a decade.
The PIF’s most recent purchasing binge is reminiscent of the fund’s early 2020 acquisition strategy, when it spent billions acquiring shares of US companies whose values had been severely damaged by the start of the coronavirus epidemic.
When the markets recovered, it later sold several of those investments.
According to data from the filing that was collated by Bloomberg, the total value of the PIF’s reported portfolio in the US decreased by nearly $3 billion in the second quarter to roughly $40 billion.
The value of the PIF’s interest in electric vehicle manufacturer Lucid Motors fell by $8.3 billion as a result of the company cutting production goals, which contributed significantly to the decrease.
As well as buying about $482 million of shares in Starbucks Corp. and roughly $496 million in Costco Wholesale Corp., the PIF also pushed deeper into tech stocks, joining Abu Dhabi wealth fund Mubadala Investment Co. to become a go-to investor in the sector.
The PIF invested about $522 million in Datadog Inc. and roughly $2 billion in Electronic Arts Inc. during the second quarter, according to the filing. Most of what’s known about the PIF’s holdings comes from regulatory filings. The fund itself discloses limited information publicly about its allocations to different geographies or asset classes.
It also invested in Zoom and Microsoft as part of a wider pick of US stocks, bringing the market value of the sovereign wealth fund’s investment portfolio to about $40.8 billion at the end of the second quarter.
The PIF acquired 213,000 class A shares in Alphabet, 4.7 million class A shares in Zoom and 1.8 million shares in Microsoft, a U.S. Securities and Exchange Commission filing showed.
Saudi Arabia added other stocks including Adobe Systems, Advanced Micro Devices, Salesforce, Home Depot, Freeport-McMoRan, Datadog and NextEra Energy.
The PIF, which manages $620 billion in assets, is at the centre of Saudi Arabia’s plans to transform the economy by creating new sectors and diversifying revenues away from oil.
The PIF is pursuing a two-pronged strategy, building an international portfolio of investments while also investing locally in projects that will help to reduce Saudi Arabia’s reliance on oil.
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