Saudi Arabia has hired BlackRock to help set up and operate an infrastructure fund that has an investment target of $53bn in the kingdom over the next decade.
The US asset manager is partnering with Saudi Arabia’s National Development Fund, a state entity chaired by Crown Prince Mohammed bin Salman, to operate the infrastructure fund over a multiyear period.
The National Infrastructure Fund (NIF) will look to invest across sectors including power, water, transport, telecommunications, education and health as part of Prince Mohammed’s ambitious goal of modernising the conservative kingdom.
The crown prince is also seeking to position Saudi Arabia as a regional economic hub, but needs to upgrade its infrastructure as part of his efforts to attract more foreign direct investment and deliver better services.
BlackRock, which invests in infrastructure around the world, has not committed to invest in the NIF, which will be funded from its parent, the National Development Fund. But the asset manager could invest in future projects as Riyadh seeks to attract foreign and domestic investors, and establish public-private partnerships.
“This is a long-term partnership to be able to build and operate a world-class development finance institution,” said Yazeed Almubarak, head of BlackRock Saudi Arabia. “It will involve hiring and bringing expertise from our global network of offices and teams to bring this partnership to bear.”
BlackRock is the world’s largest fund manager and its assets under management surpassed $9tn in the first half of this year. It opened an office in Riyadh in 2019, seeking to tap into Prince Mohammed’s economic reform plans. It already manages funds for the Public Investment Fund, the kingdom’s $450bn sovereign wealth fund, which is also chaired by the crown prince.
Stephen Groff, governor of the National Development Fund, described the kingdom’s infrastructure needs as “vast”, with the NIF given the task of building new hospitals, education facilities, transport networks and logistics capacity.
“We will be able to accept risk others can’t to help crowd-in the private sector into these deals,” Groff said. “We will continue the partnership [with BlackRock] as long as necessary to ensure that the fund is built on a solid foundation.”
The National Development Fund was set up in October 2017 to oversee state development funds. It manages more than $80bn of assets.
Prince Mohammed has announced multiple big projects across the kingdom and pledged to invest hundreds of billions of dollars over the next decade as part of his plans to diversify the oil-dependent economy.
The development fund has been earmarked as one of the key institutions to support domestic projects and is to be one of the main recipients of petrodollar surpluses accrued by the world’s top oil exporter.
