BlackRock and KSA PIF Sign Investment Management MoU

BlackRock, the world’s largest asset manager, has entered into a non-binding Memorandum of Understanding (MoU) with the Public Investment Fund (PIF) of Saudi Arabia. The MoU outlines the establishment of BlackRock Riyadh Investment Management (BRIM), a wholly owned subsidiary of BlackRock.

The non-binding MoU between BlackRock and PIF sets the stage for the creation of BlackRock Riyadh Investment Management (BRIM), a new investment platform based in Riyadh, Saudi Arabia. PIF has committed to invest up to $5 billion in BRIM, subject to achieving agreed milestones. BRIM will manage investment funds focused on Saudi Arabia, as well as the broader Middle East and North Africa region. These funds are expected to encompass a variety of asset classes, including public equities, bonds, and alternative assets like private credit and infrastructure. The overarching goal of the partnership is to attract foreign capital to Saudi Arabia and strengthen its capital markets.

However, the MoU itself is not a legally binding agreement. Finalization of a formal agreement will likely involve contracts that detail investment terms, fund management responsibilities, and risk allocation. Additionally, BRIM’s operations may require regulatory approval from Saudi Arabian authorities.

The partnership offers potential benefits for both parties. BlackRock gains access to the Saudi Arabian market and the chance to manage a portion of PIF’s capital. PIF, in turn, benefits from BlackRock’s expertise in managing diverse asset classes. From Saudi Arabia’s perspective, the MoU signifies a step towards attracting foreign investment and diversifying its economy.

There are also some considerations to keep in mind. The MoU comes after the 2018 murder of journalist Jamal Khashoggi, which led to strained relations between Saudi Arabia and some Western institutions. BlackRock’s partnership with PIF could raise concerns regarding environmental, social, and governance (ESG) factors in Saudi Arabia.pen_sparktunesharemore_vert