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BlackRock has reached an agreement with the Saudi Arabian government to open a multi-class investment firm in Riyadh, backed by a $5 billion mandate from the kingdom’s Public Investment Fund.
BlackRock Riyadh Investment Management will be a wholly owned subsidiary of the $10.5 trillion US asset manager. Riyadh-based professionals will manage funds investing primarily in Saudi Arabia, but also the rest of the Middle East and North Africa.
The aim is to attract additional foreign capital to Saudi Arabia and strengthen its capital markets through a series of investment funds managed by BlackRock.
The move is the latest attempt by the world’s largest asset manager and its global rivals to build relationships and win investment mandates in the Middle East. BlackRock added Amin Nasser, CEO of state oil company Saudi Aramco, to its board last summer.
“We are pleased to build on the close partnership we have developed with PIF over many years to launch this first-of-its-kind international investment management platform in Saudi Arabia,” BlackRock CEO Larry Fink said in a statement Explanation. “Saudi Arabia has become an increasingly attractive destination for international investment. . . and we are pleased to be able to offer investors from around the world the opportunity to participate.”
Despite a brief setback after the murder of journalist Jamal Khashoggi in 2018, Western financiers have flocked to Riyadh in recent years, hoping for a piece of the $700 billion PIF’s efforts to expand the Saudi economy beyond fossil fuels. But Saudi Arabia is struggling to attract foreign direct investment to support its ambitious transformation plans.
There has also been an influx of asset managers, particularly hedge funds, into Abu Dhabi, where the government is using its $1 trillion sovereign wealth fund and large state investors as a magnet to help build the city as a world financial center.
BlackRock and the PIF said on Tuesday that they had signed a non-binding memorandum of understanding that calls for the sovereign wealth fund to gradually invest up to $5 billion as the new company reaches agreed milestones.
The money will serve as seed capital for a variety of funds that invest in public stocks and bonds as well as alternative assets such as private credit and infrastructure. The deal will add about a dozen to BlackRock’s headcount in Riyadh, which currently stands at fewer than 20 people, according to people familiar with the plans.
Yazeed Al-Humied, deputy governor of the PIF, described the fund’s relationship with BlackRock as “well-established and growing” in a statement and said the partnership “represents a step forward in the PIF’s work to make the Saudi investment and asset management market more international.” “to make it more diverse and dynamic”.
Fink and several other top BlackRock executives are in Riyadh this week for the signing of the agreement, which was also attended by PIF Governor Yasir Al-Rumayyan, as well as meetings with potential clients and investment targets.
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