Saudi Arabia to Launch First Sovereign Wealth Fund

Saudi Arabia will be launching a new state investment vehicle, and after digging through their couches and raiding a cookie jar or two, have come up with $5.3 billion to get it off the ground:

The investment company – Sanabil al-Saudia – will be a wholly owned entity of the Public Investment Fund (PIF) and act as a portfolio manager, with a focus on maximising long term returns with investments in Saudi Arabia and overseas across various sectors.

PIF officials have told the Financial Times that the size of fund’s capital could increase in the future if it was deemed appropriate. The company will have its own staff and will now be able to begin a recruiting process, an official said.

Saudi Arabia – the world’s largest oil producer – is home to the Gulf’s largest economy, with official net foreign assets of more than $345bn, but it has traditionally invested its oil wealth conservatively.

The Saudi Arabian Monetary Agency has had the role of managing the country’s foreign exchange reserves and investment portfolio, and it is estimated that around 85 per cent of the kingdom’s foreign reserves are invested in dollar dominated fixed income securities. FT

The Saudi's are understandably cautious given the recent scrutiny SWF's have received; but the size of the fund is not very impressive given their resources. But apparently they are politically sensitive to the current climate; chances are they will not be snapping up high-profile assets like the Chrysler Building in NYC, at least out of the gate. Of course, if they want to curry favor with Americans hiring a few out-of-work Wall Street analysts would be a good start.

Saudi Arabia approves setting up of new fund
Financial Times

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