In a rare step, the Saudi fund Sovereign-Wealth Fund collects a loan of 11 billion dollars

The increase in the FIP debt is an unusual strategy for a sovereign wealth fund, which often uses domestic resources to increase a country's wealth for future generations. But the Saudi ruler has a dual mandate, both to increase wealth and to create new industries that will boost the non-oil revenue of the government. Other sovereign funds, such as Singapore's Temasek Holdings Pte. Ltd. and China Investment Corp. have also increased their leverage and are betting on sectors such as venture capital and technology whose sovereign wealth funds have generally been diverted.

Saudi Crown Prince Mohammed bin Salman accused the FIP of diversifying the country's oil economy as part of a program called Vision 2030.

The centerpiece of the program was a list of Aramco, officially known as the Saudi Arabian Oil Co., which was to inject up to $ 100 billion into PIF coffers. The IPO was to be held late this year, but the process has since been suspended, while PIF still needs liquidity to meet its ambitions and commitments.

In just two years, the approximately $ 225 billion sovereign fund has grown from a little-known government asset holding company to one of the most influential investors in the world, buying shares in Silicon companies Valley such as Uber Technologies Inc. and

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He also took tens of billions of dollars in commitments for

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$ 100 Billion Vision Fund and $ 40 Billion

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Vehicle investment in LP infrastructure.

After the news of the loan was announced Monday, the PIF then said it invested about $ 1 billion in California start-up Lucid Motors to help the company launch its first electric vehicle in 2020.

The fund's interest in the electric car markets is driven by its ambition to one day create a production center for electric vehicles, batteries and solar power in the kingdom, the Wall Street Journal reported.

Splash cash

The sovereign wealth fund of Saudi Arabia has quickly found transactions worth a billion dollars.

The FIP is also funding plans to create a $ 500 billion technology-centric city named Neom, near the kingdom's borders with Egypt and Jordan. He is building a Disney World theme park development outside of the capital Riyadh and plans to create a large tourist destination on the Red Sea.

The incursion of the BIP into the international lending market reflects the Saudi government's appetite for debt.

The Saudi authorities are encouraging Aramco to raise billions of loans and bonds to buy PIF's stake in Saudi Basic IndustriesCorp. Aramco is negotiating the price for Sabic, given that the company is known, but it is expected to raise about $ 10 billion in bank loans and $ 40 billion in additional bonds to finance the deal, the newspaper reported.

The Saudi government itself has used bond and loan markets for more than $ 50 billion over the last three years, which represents a sharp increase in borrowing. After launching a major domestic spending program to stimulate private sector growth while trying to generate revenue through new taxes and other means, the country is running a budget deficit.

Despite the sharp increase in borrowing, Saudi Arabia's consolidated public debt, which accounts for about 14 percent of the $ 683 billion gross domestic product, is one of the lowest in the world, according to Fitch Ratings. The addition of confirmed and planned debt increases by the FIP and Aramco would increase the debt-to-GDP ratio by an additional 10 percentage points.

But bankers and economists say that lenders, for the time being, show a marked interest in the debts of sovereign institutions and Saudi institutions. They say more investors than expected have been trying to take part in debt increases in Saudi Arabia over the past year. The FIP said Monday that the $ 11 billion loan was larger than originally planned due to strong interest from banks and favorable prices.

Write to Rory Jones at [email protected]