A Securities and Exchange Commission filing on Friday, May 15 revealed how billions of Saudi dollars moved hands as the Public Investment Fund (PIF), owned by its Crown Prince Mohammed bin Salman, purchased stakes in iconic American companies and large oil multinationals.

The PIF holds approximately $300 billion in capital and invests in a variety of Saudi large-scale development projects, real-estate, and a large diversified pool of international strategic investments. The fund’s activity is in line with Saudi Crown Prince Mohammed bin Salman’s “Vision 2030,” the umbrella name for a variety of Saudi activity meant to diversify and modernize the Saudi economy.

American icons

The Saudi fund invested heavily in some of the US’ most well-known companies: Bank of America, Boeing, Citigroup, Disney, Marriott Hotels and pharmaceutical giant Pfizer. The PIF also invested in Warren Buffet’s Berkshire Hathaway and Silicon Valley, with large investments in Facebook that complement its existing $2 billion stake in Uber.

The sovereign wealth fund was already investing heavily prior to the COVID-19 pandemic, buying a 15% stake in US mega-developer-related companies just before the crisis hit. The slump in stock valuations has not discouraged the fund from continuing its ambitious investments.

Even as value-driven investors such as Warren Buffet are reluctant to buy, the PIF is increasing its stake in some of the world’s most recognizable firms.

Anticipating consolidation?

It is likely that the world’s supermajors, the largest publicly traded oil and gas multinationals, stand to benefit from weak oil prices. Some have predicted supermajors could suffer from the current oil price slump caused by the pandemic and a major fall in demand. A US shale gas industry in trouble could result in a consolidation of assets by larger oil firms.

The PIF appears to be banking on this as it increased its stake in some of the world’s biggest private oil producers. It already owned stakes in Eni, Royal Dutch Shell, and Total, and increased its stake in recent weeks. The fund now holds a $483.6 million stake in Shell, $222.3 million in French oil giant Total, and a $481 million stake in controversial Canadian tar-sand oil producer Suncor Energy.

With PIF heavily investing, it appears the fund is counting on a consolidation in oil markets that will favor the supermajors. Its investments in some of the US’ most prominent companies could mean the fund is counting on a reversal of fortunes while the Federal Reserve is ensuring that American companies are provided with unlimited liquidity.

 

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