PIF Spending Shift To Spur Greenfield FDI In Saudi As Private Equity Expands

Garnier told Arabian Business that as government-led investment and Public Investment Fund (PIF) spending become more selective, private capital will increasingly fill the gap, particularly in infrastructure and utilities.

“Potentially… or at least an opportunity,” he said when asked whether reduced public spending could trigger a rise in Greenfield foreign direct investment (FDI).

“There are sectors which are Greenfield, but very well known in infrastructure. For instance, you take district cooling… we need air conditioning, and district cooling is a very powerful way to cool down new developments.”

He said such projects offered clear business models and reliable long-term returns.

He added that while projects such as district cooling are technically Greenfield, they follow proven business models backed by real estate demand, making them attractive to infrastructure funds that may invest alongside PIF.

Saudi Arabia’s drive to diversify its economy away from oil has created financing pressures across banks, corporates and government-related entities. Moody’s said earlier this month that Vision 2030’s expansion is now constrained less by oil prices than by liquidity, as credit growth outpaces deposits and state-linked firms turn to global markets for funding.

Foreign funding has risen to 11 per cent of Saudi banks’ total liabilities, up from 6 per cent in 2020, while the system’s net foreign asset position turned negative in 2024 for the first time on record, the agency said.

Despite these pressures, Investment Minister Khalid Al-Falih told FII delegates this week that foreign investment into Saudi Arabia rose 24 per cent last year to $31.7 billion and remains on track for further growth.

“Our unemployment has been halved, our women participation in the workforce has doubled,” he said. “The goal now is to get the private sector to lead the way.”

Garnier said that message is resonating with global investors.

“We do see from global investors really an increase not only in interest, but activity,” he said. “What has been really striking over the past three, four years is really the landing of a couple of big private equity GPs in the region. Brookfield… General Atlantic… we see many others who are really actively considering opening an office, looking at deals and so on.”

He said international investors were increasingly attracted by Saudi Arabia’s infrastructure, population size and reform momentum but emphasised the need for partnership models rather than traditional buyouts.

“What’s critical for all those global GPs to come in the region is really to be creative and really think partnership, not transactional,” he said.

Saudi Arabia’s Vision 2030 strategy aims to increase private-sector contribution to GDP from 40 to 65 per cent by 2030. Bain’s outlook suggests that as state-driven projects mature, the kingdom’s next growth cycle will hinge on private capital, both local and international.