Thank you very much for this interview. The first question, given the current security situation, is about your reading of the repercussions of this war on the Saudi economy and also on the fund's strategy.
Of course, the war's impact is not only on the Saudi economy or the fund's strategy, but on the global economy as a whole. Oil prices have risen, shipping costs have risen, insurance has risen, food prices have risen because most chemical fertilizers come through the Kingdom and some Gulf countries. Helium gas no longer reaches Taiwan, so they can't make chips, or there will be delays or price increases for families. As for the fund, our strategy is long-term and not just a phased strategy. It's for the next five years and is an evolution of strategies since the fund's inception in 1971, through 2015-17, 2021-25, and now from 2026 to 2030.
We will return to this new strategy for the fund or the new phase of this strategy. But regarding the war specifically, Your Excellency, are there, for example, initial commitments for external deals that are being reconsidered because of the war?
Deals and investments are being reconsidered because of the war and for reasons other than the war, based on their economic schedule. We are always reassessing all priorities and investments we have. I can't tell you that I cancel this investment and enter another, but this is dynamic. It exists with or without war, but certainly, the existence of war puts greater pressure on repositioning some priorities.
And where are the priorities now?
The priorities are, of course, based on national needs. So, it will be based on the needs of the national economy, which will be a priority for us. We are investors, not just financial investors, and this has been the case since the fund's inception. The idea of establishing the fund was not just for financial returns. Financial returns are part of the fund's objectives, but not the only objective.
So, financial returns and developmental objectives for the fund. Therefore, how do you measure them? What are the KPIs you look at that you have achieved for the Saudi economy?
The KPIs are very large for what has been achieved. To answer your question, I need to give you the stages of the fund's development since its inception in 1971. It was involved in developing the local economy between the financial sector, the petrochemical sector, and the railway company. So, it certainly had an impact on the developmental aspects. In 2015, it was a phase of transformation, where developmental objectives were not the only goal. They were complementary to us as a basic objective, but they did not remain the only objective. Because when you say you have only developmental objectives, it means you only look at development and not at feasibility studies or the economic schedule of the projects we are in. So, from 2015, when the fund emerged from the Ministry of Finance and its reporting became to the Council of Economic and Development Affairs, we began to reframe the strategy for the fund, which was from 2018 to 2020. We worked on a transformation phase by creating many major project companies like NEOM, the Red Sea, and AlUla, which were pioneering projects in the world. The fund developed, and at the same time, local and global partnerships created significant job opportunities and strengthened the partnership with the private sector. The beginning of 2021 was the third phase of the strategy's development, from 2021 to the end of 2025. We started a new phase of expansion and growth, building on the successes of previous phases since the fund's inception. We launched many national companies like Roshn, HUMAIN, and SAVI, and we also enabled existing companies like ACWA Power, Bahri, and Ma'aden. These companies existed before the fund and were not just established by it, but we participated in developing their role and expanding their activities. Then, we launched the current strategy from 2026 to the end of 2030 to continue the fund's journey, which involves transforming 13 strategic sectors into six integrated economic systems.
On what basis were these systems chosen?
To answer the question more logically, in the beginning of the first strategy, we relied on investment objectives geographically. We had six investment portfolios, two for international investment, two for local investment, and two for local real estate investment, including a special portfolio for major projects. Now, to be more precise, we started implementing the three main portfolios: the Vision Portfolio, the Strategic Investments Portfolio, and the Financial Investments Portfolio. Each of these portfolios has different investment objectives. They will certainly provide attractive financial returns, God willing. The Vision Portfolio's objective is to enhance integration between strategic sectors with priority for the Saudi economy. The Public Investment Fund also aims to maximize the value of the fund's companies and continue driving local economic growth by developing approximately six integrated economic systems. The second portfolio, the Strategic Investments Portfolio, manages and maximizes strategic returns and increases the economic impact of the fund's companies. The third portfolio, the Financial Investments Portfolio, its main objective is to achieve financial returns, whether domestically or internationally.
The fund since the transformation has achieved average returns of around 7%. Are you now targeting higher returns than that?
In general, yes. Let me also give a historical overview of the fund's achievements. The AUM, or Assets Under Management, grew from about 500 million Saudi Riyals in 2015 to over 3 trillion Riyals. The total shareholder return is approximately 7% annually. About 750 billion was invested locally, and participation in the GDP was about 910 billion. More importantly, I believe, is the local content, which was approximately 590 billion Saudi Riyals. The fund's participation in the local economy leads to what is called economic complexity. We don't just look at GDP growth, but at its complexity, and local content is the most important point of economic complexity. In addition, many global fund managers and investment firms opened their regional offices within the Kingdom. We also attracted, from 2021 to 2025, foreign investments exceeding 75 billion dollars, sorry, Riyals, to the Saudi market with the fund's participation.
Is foreign investor appetite affected today because of the war?
Certainly, investor appetite in general is affected, not just foreign. I'm talking about the European investor within Europe, their appetite will differ. The same applies to the Asian investor within Asia—the Chinese, Korean, Japanese, Indonesian—all are affected because the war is not just in one region, but in one of the most important regions that feeds the world with many basic commodities: oil, gas, and petroleum or gas derivatives, including artificial fertilizers. So, there will certainly be an impact.
With the new strategy, is there any change in the volume of investments that will be injected locally compared to foreign investments?
This has been our approach from the beginning, and this is what happened with the restructuring of the portfolios—the Vision, Strategic, and Financial. We are focusing more on the Saudi economy and investing within the Saudi economy in a financially and commercially attractive way.
Are there specific ratios, for example, that you target for local investment?
From the beginning, we said that local investment would be approximately 80%, and we aim for international investment to be 20%. Historically, the fund's local investment was 98.5%, then we reached nearly 30% internationally. But this does not mean we are reducing investments in absolute value. The amounts may increase, but the ratio decreases because our assets under management are supposed to increase over the coming years. So, even if the ratio decreases, the amounts can increase.
