Al-Masjid Al-Nabawi, Saudi Arabia. Picture: ISTOCK
Al-Masjid Al-Nabawi, Saudi Arabia. Picture: ISTOCK

London/Dubai — Saudi Arabia’s sovereign wealth fund, which aims to become a $2-trillion investment giant, is considering borrowing from banks for the first time as it seeks investments in the kingdom and abroad, according to people familiar with the matter.

The Public Investment Fund had held talks with local and international banks and could raise about $5bn in 2018, some of the people said, asking not to be identified because the information was private.

No final decisions on timing or size had been made and the fund could instead turn to government financing, the people said. A spokesman for the fund declined to comment.

The fund was willing to borrow as it sought to diversify the kingdom’s oil-dependent economy and boost returns from investments, MD Yasir Al-Rumayyan said in October.

Saudi Arabia is stepping up efforts to turn the Public Investment Fund into a global giant by giving it ownership of state-owned oil company Saudi Aramco, which is preparing for what could be the world’s biggest initial public offering.

The sovereign fund has announced some large international deals, including a commitment to put $20bn into a US infrastructure fund managed by Blackstone, and as much as $45bn in a technology investment fund managed by SoftBank, as well as a $3.5bn stake in Uber Technologies.

The Public Investment Fund is behind several large real estate developments in Saudi Arabia, including a new city called Neom, which that will be built on the Red Sea coast; an entertainment city on the edge of Riyadh; and another tourism project on the Red Sea.

It had finalised an accord to take over the management of Riyadh’s $10bn unfinished financial hub, people familiar with the matter said in 2017.

Bloomberg

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