Saudi Arabia’s Public Investment Fund (PIF) has signed a $10 billion syndicated bridge loan and the proceeds will be used for general corporate purposes as well as enable the sovereign wealth fund to accelerate the implementation of its investment programme.
HE Yasir Al-Rumayyan, the Governor of PIF, said, “This bridge loan will enable us to accelerate the implementation of our ambitious investment programme while ensuring that we maintain a conservative level of leverage.”
PIF stated that the syndicated bridge loan was agreed with a group of 10 international banks, including Bank of America Corporation, BNP Paribas together with Citigroup, Credit Agricole as well as HSBC, J.P. Morgan and Mizuho Bank.
Similarly, MUFG Bank, Standard Chartered Bank and Sumitomo Mitsui Banking Corporation also participated in the syndicated bridge loan. The banks are all part of the sovereign wealth fund’s core banking group, created in September 2018 through the signing of an $11 billion international syndicated loan facility.
Saudi Aramco agreed to acquire PIF’s 70 per cent stake in SABIC for $69 billion in March 2019, the sale consolidates upstream and downstream assets within the state-owned oil company ahead of a proposed share sell in December 2019.
As outlined in PIF programme 2018-2020—launched in October 2017—the Kingdom’s sovereign wealth fund’s four sources of funding are capital injections by the government, asset transfers from the government as well as retained investment returns, and PIF loans and debt instruments independently issued by PIF.
“The agreed sale of PIF’s stake in SABIC is anticipated to realise a significant level of capital to be redeployed according to PIF’s mandate, however, the regulatory requirements ahead of completion mean there is likely to be a period of delay before the sovereign wealth fund is able to redeploy that capital,” said Al-Rumayyan.
The Saudi sovereign wealth fund manages assets around $320 billion on behalf of the government and owns stakes in many of the Kingdom’s major banks and corporations. The fund is at the centre of Crown Prince Mohammed bin Salman’s economic transformation drive, financing several mega-developments including the $500 billion futurist economic free zone NEOM City and the Red Sea Development Company's mega tourism project.