Towards a sociology of state investment funds? sovereign wealth funds and state-business relations in Saudi Arabia

ABSTRACT

While sovereign wealth funds (SWFs) are making significant incursions into global financial markets, various countries are increasingly establishing funds geared towards national development. Saudi Arabia’s Public Investment Fund (PIF) is the fastest-growing SWF, with most of its assets deployed domestically. Beyond restructuring the economy, deploying the PIF intrinsically implies balancing political and business interests. Yet, there has been little reflection on how socio-political relations with socioeconomic actors shape sovereign wealth allocation. Who gets access to SWF resources, and how? What kind of power relations are maintained or established in the process of SWF development? This article unpacks PIF activities to argue for a microfoundation of how domestic politics influence SWF decision-making. To do so, I introduce a sociology of SWFs using the tools of social network analysis. I find that the PIF mainly targets companies linked to family-owned conglomerates connected to merchant elites with long-standing personal connections to the Saudi state. This article contributes to rentier state debates and broader political economy scholarship by showing how beyond decision-making and asset allocation models, state investment funds also hinge on ancillary networks of social institutions, often generated from ingrained formal and informal interactions between states and society.

KEYWORDS:

• Sovereign wealth funds
• state-society relations
• Saudi Arabia

Acknowledgements

The author would like to thank Ewan Stein, Charlotte Rommerskirchen, Lucy Abbott, and the anonymous referees for their helpful and insightful comments on earlier versions of this article.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Data from Capital IQ as of 20 November 2021

2 Data from Tadawul as of November 2021

3 In June 2020, Aramco acquired PIF's SABIC stake (70%) at a market value of $69.1 billion (SABIC 2020b). Board appointment mechanisms are likely to change following the end of directors’ tenure in 2022.

4 Data from Tadawul as of November 2021.

5 Data from Tadawul as of November 2021.

6 Data from Tadawul as of November 2021.

7 Data from Tadawul as of November 2021.

8 Data from Tadawul as of November 2021.

9 Data from Tadawul as of November 2021.

10 Data from Tadawul as of November 2021.

11 Data from Tadawul as of November 2021.

12 Data from Tadawul as of November 2021.

13 Data from Tadawul as of November 2021.

Additional information

Notes on contributors

Alexis Montambault Trudelle

Alexis Montambault Trudelle is a doctoral candidate in Politics and International Relations at the University of Edinburgh.