Dubai, UAE — Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), reported 9.6 percent growth in its US equity holdings to US$38.9 billion in Q2, with electric vehicle manufacturer Lucid contributing just 16 percent of the increase despite representing 24 percent of the portfolio.
Lucid continued to drag down the fund’s US public holdings with q-o-q growth of 6.2 percent to US$9.47 billion – a level that was still 45.6 percent down on end-June 2022, according to Global SWF, which analyzes assets, strategies, portfolios and staff of sovereign wealth funds.
The rest of the portfolio rose 10.7 percent q-o-q to US$29.46 billion, a performance that beat the S&P 500 Index which grew 8.3 percent over the same period; on a y-o-y basis, the non-Lucid equities were up 25.9 percent.
In Q2, PIF maintained a holding pattern, with only minor changes: selling off its shares in digital healthcare company Babylon Holdings which were worth just US$15 million at end-March and reducing its position in adhesive producer Avery Dennison, while increasing its stakes in Air Products and Chemicals (to US$823 million) and Alibaba Group (to US$121 million).
In terms of sectoral weight, retail & consumer (including gaming) and tech stocks increased in their share of the portfolio to 39 percent and 16 percent with growth in value of 15 percent and 18 percent, respectively, Global SWF said.
Listed infrastructure remained at 8 percent of the total share, while a sluggish recovery in banking stocks saw the value of its financial services exposures remaining at 5 percent of the total.
PIF increased the number of shares it held in Lucid by 24 percent to 1.37 billion following a US$3 billion stock offering by the carmaker, nearly two-thirds of which came from the Saudi fund. PIF agreed to buy 265.7 million shares in a private placement for about US$1.8 billion, implying a price of about US$6.80 per Lucid share; by end-June it was trading at US$6.89 but the price had fallen to US$6.42 today, down 6 percent from end-December.
However, its liquidity has recovered due to the stock offering, giving it an edge over cash-poor competitors that are battling parts shortages.
The EV manufacturer has struggled with mounting losses and tightening cash reserves due to recession risks and a price war with its bigger rival Tesla, which has undermined PIF’s otherwise successful US equities holdings.
It insists it has enough cash to start producing its long-awaited Gravity SUVs next year and into 2025. The California-based EV maker is building its first overseas production factory in Saudi Arabia and the Saudi government has agreed to buy up to 100,000 Lucid vehicles over the next decade.
The development of EVs is part of Saudi Arabia’s Vision 2030, which aims for 30 percent of vehicle sales to be electric by the end of the decade, supported by locally manufactured cars. PIF also aims to reach net zero by 2060 and is deploying various efforts in the development of renewable energy and sustainable communities. The automotive industry is one of the main targets for carbon emissions reductions, but also it sees the sector as an opportunity for economic diversification with plans to export over 150,000 EVs in 2026 and by 2030. By bringing Lucid back into its full ownership, PIF could better align the carmaker with its vision.