Saudi Arabia’s Public Investment Fund (PIF), which manages nearly a trillion dollars in assets, is set to invest $100m in Malaysian airline AirAsia. The carrier is in a fundraising round following years of financial difficulties caused by the pandemic and supply chain problems.
People familiar with the matter told Bloomberg that while an announcement could be made in a few weeks, AirAsia is still in discussions with prospective investors from Singapore and Japan.
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The controlling shareholder at AirAsia, Capital A Bhd, is looking to restructure ownership to merge the business with sister firm AirAsia X Bhd. AirAsia has a backlog order for 350 aircraft with European manufacturer Airbus SE. A block of those delivery slots has recently been taken over by the new airline RiyadhAir.
The deal gives RiyadhAir, which is owned by PIF, access to more aircraft, as it prepares to launch flights later this year. The fund has a wide range of aviation assets, such as an aircraft leasing firm and space and defence firms. It also owns a 15% stake in London’s Heathrow Airport.
PIF is central to Saudi Arabia Prime Minister Mohammed bin Salman’s plan to transform the Kingdom’s economy and decrease its oil dependency. Creating a major tourism industry is central to Vision 2030, which has a stated goal of reaching 150 million tourists by 2030.
For years, the fund has been seen as a fast cash machine by foreign investors looking to tap into its liquidity. This perception has changed recently, as the government has scaled back on international investments and focused on funding projects closer to home. It has also cut costs on domestic projects, such as its ambitious Neom desert project which initially had a cost of $1.5t.
