Saudi sovereign wealth fund said to weigh offering billions for buyout expertise

Saudi Arabia's sovereign wealth fund has discussed investing billions of dollars in global buyout funds as the kingdom seeks private equity's help to manage its portfolio of companies at home, according to people familiar with the matter.

The Public Investment Fund — with more than $100 billion worth of shares in listed local companies including Saudi Basic Industries Corp. and Saudi Telecom Co. — has informally reached out to some of the world's leading private equity firms to secure know-how and expertise to help improve these businesses, the people said, asking not to be identified as the deliberations are private.

Arrangements could include the buyout firms overseeing some of PIF's portfolio companies for a fee, providing operating partners or taking minority stakes in individual companies, the people said. Talks about the potential partnerships are at a preliminary stage, and the wealth fund may elect not to proceed with any such ideas, they said.

The sovereign wealth fund is going to become the world's largest when the government gives it ownership of Saudi Arabian Oil Co. along with the proceeds from the oil producer's initial public offering, expected to be the biggest listing ever. PIF's executives see the need to improve management and gain dealmaking expertise from buyout firms, the people said.

Yasir Alrumayyan, head of the PIF, has met with some of the industry's most high-profile names in recent weeks, including David Rubenstein, co-CEO of Carlyle Group, TPG founder David Bonderman and Blackstone Group CEO Steve Schwarzman, the people said.

Most of the meetings took place in Davos, Switzerland, during the World Economic Forum conference last month. Mr. Alrumayyan also held meetings with key executives in London, New York and San Francisco, the people said. The buyout firms haven't traditionally managed companies for their shareholders, and it's unclear how they reacted to PIF's proposal, they said.

Representatives for PIF, Carlyle, TPG and Blackstone declined to comment.

The move shows the increasing role the wealth fund is playing in the transformation of Saudi Arabia's domestic economy under Deputy Crown Prince Mohammed bin Salman. The kingdom said last year that it was injecting 100 billion riyals ($26.7 billion) from its official reserves to boost the firepower of the fund to accelerate dealmaking.