Saudi Public Investment Fund (PIF) Reveals Plans to Open New Offices in China

Recently, the Saudi Investment Ministry has organized three investment events in major Chinese cities including Shenzhen, Guangzhou, and Beijing, highlighting the growing economic ties between the two nations.

Furthermore, at a recent event in Hong Kong, the Saudi Public Investment Fund (PIF) announced plans to expand its presence in mainland China. This move underscores the ongoing efforts of Middle Eastern investors to strengthen their collaboration with the broader China and Asia-Pacific region.

"I visited Hong Kong, Guangzhou, Shanghai, Shenzhen, Beijing, and other places with government departments and business representatives, and I was amazed by the scale of these cities and their achievements in innovation," said Khalid Al-Falih, Saudi Minister of Investment, in his opening speech at today’s China-Saudi investment conference in Beijing.

The event, held at the Wanda Mandarin Hotel, saw hundreds of officials and business representatives from China and Saudi Arabia fill up conference rooms. The Vice Minister of Commerce, Li Fei, delivered the opening speech.

The forum session included participation from financial industry figures from China International Capital Corporation, Fosun Capital, eWTP, and also saw representatives from industries like Envision Energy, Zijin Mining, Fosun International, and Haichang Ocean Park.

The collaboration between Middle Eastern capital and Chinese companies is deepening. On one hand, represented by the Saudi Investment Ministry, Middle Eastern government investment departments are actively welcoming Chinese enterprises to establish themselves in the Middle East, aiding in local energy transformation and infrastructure construction.

On the other hand, Middle Eastern sovereign wealth funds are also accelerating their investment and presence in mainland China, intending to use China as a base to expand their investment map in Asia.

The establishment of offices by Middle Eastern capital in different regions involves various considerations. Hong Kong is a financial hub, and setting up an office there aims to radiate across the entire Asia-Pacific region. Establishing offices in mainland cities like Beijing and Shanghai means they will delve deeper into the heartland of China.

PIF is Saudi Arabia’s largest sovereign wealth fund, managing over US$700 billion in assets, and has offices in New York, London, Jordan, Qatar, and other locations. The PIF office in Hong Kong was established earlier in 2022.

The connection between Saudi Arabia and Hong Kong is growing closer. In November, the first Asia-Pacific ETF tracking Saudi stocks was listed on the Hong Kong Stock Exchange, attracting an initial investment of US$1 billion, becoming one of the largest listed funds in the region.

PIF was a major investor in this fund. At a recent meeting, Hong Kong and Saudi Arabia signed an investment promotion cooperation memorandum of understanding, aiming to strengthen cooperation in attracting investment between Hong Kong and Saudi Arabia.

Being an LP was PIF’s main way of involving in private equity in the past. For example, it was the largest LP of the SoftBank Vision Fund. However, its investment in SoftBank Vision fund suffered heavy losses, with a comprehensive loss of around US$15.6 billion in 2022.

As a result, PIF has adjusted its investment style and accelerated direct investments in China and other regions. At the end of 2021, it submitted a QFII (Qualified Foreign Institutional Investor) application to the China Securities Regulatory Commission and then opened an office in Hong Kong in early 2022.

In June 2023, PIF and Guolian Aquatic Group launched an international seafood trade cooperation totaling US$500 million, while also financing Guolian Aquatic’s global procurement, planning a cooperation amount of US$60 million. This year, PIF’s direct investment amount in China has already exceeded US$1 billion. It is foreseeable that after establishing an office in mainland China, PIF’s investment frequency will further increase.

Apart from PIF, other Middle Eastern capital has also established a presence in China. In September 2023, the Abu Dhabi sovereign wealth fund Mubadala’s Beijing office held an opening party. Another Abu Dhabi sovereign wealth fund, the Abu Dhabi Investment Authority, established an office in Beijing in 2021.

In 2019, Saudi Aramco officially announced the establishment of a subsidiary growth fund Prosperity7 Ventures, which opened China offices in Beijing and Shanghai. Saudi Aramco is a state-owned petroleum and natural gas company of Saudi Arabia.

The Kuwait Investment Authority came earlier, establishing two offices in Beijing and Shanghai in 2011 and 2018, respectively. The UAE’s G42 Expansion Fund, established last year, has already set up an office in Shanghai this year, headed by Hu Ningfeng, former head of JD.com’s strategic investment department.

Overall, Beijing, Shanghai, and the Greater Bay Area are the preferred regions for Middle Eastern capital to establish offices in China, and their teams are mostly composed of investors with rich experience in China.

Reflecting the growing collaboration between Middle Eastern capital and Chinese industries, numerous conferences and summits have been organized to foster these ties.

Today, the Saudi Investment Forum, an event co-organized by the Saudi Investment Ministry and the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME), was held in Beijing. The forum is anticipated to draw 700 official attendees, encompassing government representatives, senior officials, CEOs, and investors.

The Saudi Investment Forum aims to strengthen the strategic partnership between Saudi Arabia and China in the fields of economy, investment, and trade, under the framework of Saudi Arabia’s Vision 2030. The forum’s dialogues will cover topics such as clean energy, finance, investment, mining, and minerals.

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