Saudi Arabia’s Public Investment Fund (PIF) and Goldman Sachs Asset Management have recently signed a non-binding memorandum of understanding (MoU). This partnership will allow PIF to serve as a strategic anchor investor for new private credit and public equity strategies in Saudi Arabia and the wider Gulf Cooperation Council (GCC) region.

An anchor investor is crucial as they typically invest just before an initial public offering (IPO), providing significant support for companies aiming for a successful market entry. Yazeed A. Al-Humied, the deputy governor and head of MENA investments at PIF, emphasized that this collaboration highlights PIF’s ongoing efforts to form partnerships with leading international financial institutions. He mentioned that it will not only enhance local markets but also attract global capital and expertise to the region while promoting knowledge transfer within Saudi Arabia.

The investment funds created under this agreement aim to raise equity capital from international sources, designating a substantial portion for investments within Saudi Arabia. This initiative is expected to bolster the domestic asset management industry, encouraging both regional and international managers to expand their operations in the country. The asset management efforts align with PIF’s broader strategy to diversify the Saudi economy and strengthen local capital markets.

As part of the agreement, the private credit strategy will focus on directly originated senior and junior loans and debt for companies based in the GCC region or heavily engaged with it. Concurrently, the public equity strategies will concentrate on investments in publicly-listed equity securities linked to companies operating on the Saudi exchange.

Marc Nachmann, the global head of asset and wealth management at Goldman Sachs, expressed pride in partnering with PIF to develop these investment strategies, which they believe will yield strong risk-adjusted returns. He noted that leveraging their extensive experience in public and private markets aims to help clients access the exciting opportunities arising from the rapid economic transformation in Saudi Arabia and the GCC.

The collaboration will also facilitate knowledge-sharing, which is intended to stimulate growth within the Saudi asset management sector. By combining PIF’s institutional strength with Goldman Sachs Asset Management’s investment experience, the partnership aims to position Saudi Arabia as a global investment hub. Additionally, Goldman Sachs is seeking to expand its presence in Saudi Arabia, having recently opened a new office in Riyadh as part of this partnership.