The Post-Oil Era: Led by Saudi Arabia?
Saudi Arabia sees the writing on the wall—the end of the oil era is near. The kingdom is planning accordingly, creating the world’s largest sovereign fund to manage its massive amounts of wealth, the goal of which is to diversify the country’s financial holdings.
The Public Investment Fund (PIF), masterminded by Deputy Crown Prince Mohammed bin Salman (second in line to the throne), will control more than $2 trillion, generated by the sale of shares in Saudi Aramco’s parent company.
By taking the company public, selling shares, and transferring the funds to the PIF, Saudi Arabia will become a major investment player in the global market (and we’re not talking about some distant future—the initial sale of Aramco shares is scheduled for as soon as 2017.)
This forward-thinking move “will technically make investments the source of Saudi government revenue, not oil,” says Prince Mohammed. “What is left now is to diversify investments. So within 20 years, we will be an economy or state that doesn’t depend mainly on oil.”
Saudi Arabia, currently the world’s largest crude exporter, has been hit hard by the global decline in oil prices. Divestment hedges against future fluctuations in an increasingly speculative market, and it prepares the country’s economy for the inevitable transition away from fossil fuels.
With its gargantuan assets, the PIF will readily place Saudi Arabia in the position to shape international markets (as a point of reference, the PIF will have the purchasing power to acquire Apple, Google, Microsoft and Berkshire Hathaway, with change to spare.) No doubt, Saudi Arabia will certainly make an indelible mark on any industry that it deems investment worthy.
Read more on The Post-Oil Era: Led by Saudi Arabia...