Saudi replaces bank governor as PIF changes tack

SAMA Governor Yasir al-RumayyanSaudi Arabia’s campaign to attract more inward investment from the international business community appeared to heat up today with the reinstatement of the former chairman of its Stock Exchange Fahad Al-Mubarak as governor of SAMA, the Kingdom’s central bank and monetary agency. He replaces Ahmed al-Kholifey who has held the post since 2016 and, although no explanation has been given for the move, it appears to be connected to Crown Prince Mohammed bin Salman’s recent pledge to double the money available for its PIF sovereign wealth fund to develop and diversify the Kingdom’s economy.

With Riyadh preparing to welcome more than 60 international speakers in person and another 80 by videolink to its annual Future Investment Initiative Institute (FIII) conference on Wednesday, it is also almost certainly no coincidence that the PIF’s governor Yasir al-Rumayyan chose today to give an interview to the Financial Times. In it, he  confirmed that the fund’s international exposure would drop from around 30% to 20% of assets under management during the next five years.

WeWorkSaudi Arabia’s increased efforts to attract inward investment suggests that the economic downturn triggered by the COVID-19 pandemic has forced it to rein its international ambitions. The first signs of trouble emerged last May when Japan’s Softbank Group reported an eye-watering $18bn loss at its PIF-backed Vision Fund, thanks largely to a $10bn collapse at the WeWork office-sharing firm. It was also hit by a poor performance at Uber, which lost $2.9 bn in the first quarter of 2020 alone.

Those efforts are already bearing fruit, according to the PIF governor, and the fund is currently in talks with electric car specialists Lucid Motors about the possibility of building an electric vehicle factory near the Red Sea city of Jeddah. It is also in talks with “many” companies already backed by the Vision Fund. “The next step is to go forward in getting them to the kingdom,” he said.