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Saudi Arabia wealth fund and Italy’s Pirelli plan US$550 million tyre factory

PIF will hold a 75% stake in the new joint venture, with Pirelli holding the remaining 25%
By Goh Thean Eu   
October 30, 2023

Saudi Arabia’s Public Investment Fund (PIF) has signed a joint venture agreement with Italy’s Pirelli Tyre to set up a tyre manufacturing facility in Saudi Arabia at an estimated investment of over US$550 million as the Middle Eastern nation seeks to become a global automotive hub within seven years.

PIF will own three-quarters of the plant with Pirelli holding one-quarter, the sovereign wealth fund says in a statement on October 27. Production is expected to start in 2026.

The deal comes less than a week after PIF signed a joint venture agreement with South Korea’s Hyundai Motor Company to build a car manufacturing plant in Saudi Arabia, estimated to cost over $500 million.

“Saudi Arabia is set to become a global automotive manufacturing hub by 2030. PIF has established a world-class automobile sector in Saudi Arabia by driving transformation and boosting manufacturing capabilities, infrastructure and supply chains in Saudi Arabia and beyond,” PIF says.

According to Yazeed A. Al-Humied, deputy governor and head of Middle East and North Africa investments at PIF, the collaboration with Pirelli “marks another pivotal milestone in our journey to diversify the economy, enhance sustainability and localise manufacturing capabilities in Saudi Arabia”.

“Through this joint venture with Pirelli, PIF is building production capabilities in the automotive and mobility value chain and enhancing opportunities for private sector contribution,” he says.

PIF had $700 billion of assets under management as of end-March 2023.