Public Investment Fund of Saudi Arabia
In early 2020, Crown Prince MBS wanted PIF to buy specific stocks as markets plummeted. The board voted against the move as too risky, but MBS circumvented governance by taking the matter directly to King Salman, who issued a royal decree overriding the board. This reveals PIF's structural reality: MBS holds a 'governance escape hatch' through his simultaneous roles as Crown Prince, Prime Minister, CEDA Chairman, and PIF Chairman—plus direct access to the King. The board can deliberate and advise but cannot actually veto the Crown Prince's decisions. Saudi Arabia needs oil at $96/barrel to balance the government budget, or $113/barrel when including PIF spending—yet oil prices are ~30% below 2022 peaks.
Power Dynamics
Operates under 2015 Council of Ministers Decree 270 that moved oversight from Ministry of Finance to Council of Economic and Development Affairs (CEDA). Board responsible for investment decisions, risk management, and fiduciary duty.
Mohammed bin Salman exercises complete control through position stacking: he chairs both PIF's board AND its oversight body (CEDA), while also serving as Prime Minister, Crown Prince, Defense Minister, and Vision 2030 architect. Creates a 'governance loop' where MBS oversees himself. Board can provide recommendations, but MBS can bypass dissent via royal decree. Over 60% of PIF investments focus on domestic giga-projects (NEOM, Qiddiya, Red Sea) serving Vision 2030 political objectives rather than purely commercial returns.
- King Salman can theoretically veto but typically ratifies MBS requests via royal decree
- PIF board can vote against but cannot enforce opposition
- International debt markets and credit ratings provide only practical constraint—PIF needs investment-grade status
- The 2024 Aramco share transfer was explicitly to shore up 'PIF's credit rating'
- MBS ↔ King Salman: Critical relationship enabling governance overrides
- MBS ↔ Yasir Al-Rumayyan: Governor built PIF from 4 to 2,000+ employees but authority diluted across multiple roles (also chairs Aramco, Newcastle, LIV Golf)
- PIF ↔ Aramco: PIF owns 16% (~$320B), receives ~$19B annually in dividends
- PIF ↔ Vision 2030 Giga-Projects: PIF owns 92+ companies including NEOM
Revenue Structure
Public Investment Fund of Saudi Arabia Revenue Sources
- Aramco dividends 50%
- Government transfers 25%
- Debt financing 15%
- Investment returns 10% ↓
~$19B annually from 16% stake; but Aramco announced ~33% dividend cuts in 2025
Direct transfers plus asset transfers (Aramco equity, SOEs, real estate)
Major emerging market debt issuer
7.2% average since 2017, near-zero in 2024
Extreme oil price sensitivity despite diversification rhetoric. Saudi needs $113/barrel including PIF spending vs current lower prices. Aramco cutting dividends by a third. 60%+ in illiquid domestic giga-projects with 10-20+ year timelines. Doom loop: oil dependence → need to diversify → borrow to invest → need Aramco dividends to service debt → increased oil dependence. 2025 saw 20% spending cuts across 100+ portfolio companies.
Norway GPFG returned 16.5% in H1 2025; diversified across 9,000+ companies. ADIA 30-year return 7.1%, commercially focused. PIF returned 7.2% average (2017-2024), near-zero in 2024. Over 60% allocated to political giga-projects. Much less diversified geographically and by asset class than peers.
Decision Dynamics at Public Investment Fund of Saudi Arabia
Pandemic stock purchases (March-April 2020): MBS decided to invest billions, board voted against as too risky, MBS obtained royal decree within days, executed trades. LIV Golf contracts executed rapidly with $200M for Mickelson, $150M for Johnson.
Newcastle United takeover (April 2020-October 2021): Filed for Premier League approval, expected 4 weeks, took 18+ months due to external governance (piracy disputes, geopolitical concerns). When PIF faces external veto players with actual authority, decisions slow dramatically.
MBS's attention is the primary bottleneck. Items he prioritizes move instantly; items waiting for his attention languish. Al-Rumayyan has 'obligations diluted across portfolio.' The 20% spending cuts and contract cancellations (like $5B NEOM contract canceled one day before signing) suggest resource constraints forcing prioritization.
Failure Modes of Public Investment Fund of Saudi Arabia
- SoftBank Vision Fund losses (2019-2020): ~$45B invested, fund lost $17.7B in FY2019-2020 due to WeWork/Uber. SoftBank CEO admitted 'hasn't delivered enough return' and 'still owes' PIF
- 2022 annual loss: $16.5B loss primarily from SoftBank and tech markdowns. Profit plunged 60% YoY
- LIV Golf losses (2022-present): Over $1.1B losses since launch, seeking exit via PGA merger
- Huwaitat tribe evictions at NEOM (2020-present): One resident killed, death sentences for protesters, Human Rights Watch documented abuses
- Khashoggi murder connection (2018): Sky Prime Aviation (transferred to PIF) owned planes used by Saudi agents
- Oil price dependence trap: 62% of government revenue from oil despite diversification goals
- Personalization risk (MBS dependency): Vision 2030 'key person dependency' with no succession plan
- Giga-project illiquidity: 60%+ in long-duration projects with 10-20+ year timelines
- Dual mandate contradiction: Commercial returns vs political transformation creates inherent conflicts
- Credit rating constraint: Must maintain investment-grade to access debt markets
Oil collapse to $50-60/barrel sustained → crater Aramco dividends and transfers → PIF committed to $40-50B annual spending but generating near-zero returns → massive debt accumulation or giga-project abandonment. MBS succession crisis → Vision 2030 collapses → new leadership liquidates giga-projects → massive writedowns. Giga-project cascading failures → credibility collapse → credit downgrade → debt market access lost.
Biological Parallel
PIF operates like slime mold that expanded from tiny organism ($150B in 2015, 4 employees) to massive network ($1.15T, 2,000+ employees, 92+ companies) through resource centralization and redistribution. Just as slime mold concentrates nutrients extracted from environment, PIF centralizes Saudi oil wealth (Aramco dividends, SAMA transfers) under singular control (MBS/nucleus). The organism extends pseudopod-like tendrils in multiple directions—sports (Newcastle, LIV Golf), tech (SoftBank), real estate, giga-projects. Like slime mold's rapid decisions without traditional brain, PIF bypasses governance through central controller's commands. Slime mold reorganizes network when resources shift—PIF announced 20% cuts in 2025, redirecting from international to domestic. Both face same vulnerability: dependence on continuous resource input. When resources dry up, slime mold retracts; PIF showing similar behavior with spending cuts as oil revenues decline.