Saudi Arabia’s private markets are set to receive a boost from the Kingdom’s sovereign wealth fund, with plans designed to increase the role of the domestic private sector from 40% to 65% of GDP by 2030.

At the PIF Private Sector Forum held in Riyadh this week, the Public Investment Fund (PIF) outlined a series of objectives to boost the non-oil economy, ranging from the integration of portfolio companies with local suppliers and a broadening of its real estate ambitions.

Three new initiatives define the fund’s efforts to “crowd in” private sector investment:

  • The Local Content Growth Programme (Musahama) aims to increase the share of local content spend by portfolio companies to 60% of the total, through procurement and design. PIF claims to have invested nearly US$1.3 billion in four national companies in the contracting sector in recent months, in support of Musahama.

  • The Suppliers Development Programme will develop and increase the skills of local suppliers and contractors to meet the demands of PIF’s portfolio companies, particularly helping Tier 2 and 3 contractors to qualify as vendors.

  • The Private Sector Hub is being established to share supplier and investment opportunities with the private sector to bolster domestic supply chains.

Four MoUs were signed by the fund, including: a deal with the Local Content and Government Procurement Authority to develop local content in the national economy; an agreement with the Building Technology Stimulus Initiative under the Ministry of Municipal, Rural Affairs, and Housing to explore opportunities for developing construction methods; another memorandum with the Saudi Contractors Authority to support PIF’s real estate schemes by cultivating the local contracting sector; and a deal with the Federation of Saudi Chambers to increase local content in contracts.

The CEO of the Private Sector Partnership Reinforcement Program (Shareek), Abdulaziz al-Arifi, stated that Shareek’s role would focus on providing support and incentives to large companies to maximise growth within the Kingdom and reach the target of US$1.3 trillion.

Portfolio companies and PIF-led projects are rolling out a plethora of opportunities for local contractors. At this week’s forum, PIF-owned real estate developer ROSHN launched its first project in Eastern Province, Alfulwa, which aims to house 100,000 people. ROSHN's Chief Development Officer Oussama Kabbani said the company had already begun the construction work on the project, which is located 7km from the center of Al-Ahsa and will create 18,000 residential units. The Alfulwa project will be the fourth community launched by ROSHN, following Sedra and Warefah in Riyadh and Alarous in Jeddah.

Another PIF subsidiary, the Saudi Downtown Company, announced an MoU with RedSea, the Saudi AgTech business which is advancing commercial farming in hot environments across the world. RedSea will build and operate greenhouses at SDC locations across the Kingdom, providing local food production.

The elements of these initiatives were already part of PIF’s strategy, such as the development of the Saudi Coffee Company (SCC), which was established by the fund with a mandate to develop the Saudi coffee industry, investing SAR1.2bn ($319m) in the national coffee sector over the next 10 years. This is supporting supply chains as well as adding value to the country’s non-energy resources and skills.

Related funds PIF