First published: 26-Oct-2023 14:06:57

The partnership between the Fund and Pirelli will allow the localization of production and capacity building in the field of tire manufacturing technology to create a leading brand locally and regionally

The Public Investment Fund is working to make the Kingdom a global center for automobile manufacturing

Riyadh/Milan: The Public Investment Fund (the Fund) and Pirelli Tire SPA (Pirelli), the world leader in the tire industry, announced the signing of a joint venture agreement to establish a tire factory in the Kingdom. The Fund's share of the new joint venture (the Project) will be 75%, while Pirelli will own 25%. It will also be a strategic technical partner to support the development of the Project, by providing technical and commercial expertise.

The factory is expected to begin production in 2026, and its products include the manufacture of high-quality tires bearing the Pirelli brand, intended for passenger transport vehicles. The project will also produce tires bearing a new Saudi brand directed to the local and regional markets. The estimated value of investments in the project is approximately 2 billion riyals. The project will have a neutral impact on Pirelli's deleveraging goals until 2025.

The agreement represents a new step towards achieving the goal of making the Kingdom a global center for automobile manufacturing by 2030. It also shows the Fund’s impact in establishing the automotive sector on a global level in the Kingdom, by leading the transformation at the sector level and enhancing local capabilities in the fields of manufacturing and infrastructure, and contributing to increasing the strength of the automotive sector in the Kingdom. Supply chains locally.

Among the most prominent investments in this field is the recent announcement by the Fund and Hyundai Motor Company of signing a joint venture agreement with the aim of establishing a highly automated factory for manufacturing cars in the Kingdom with investments exceeding 1.8 billion Saudi riyals. The Fund also recently announced the launch of the National Company for Investment in the Automotive and Mobility Sector “Tasaro’”, an investment company specialized in developing local capabilities for the automotive and mobility sector supply chains in the Kingdom.

The fund has made many investments in the mobility sector, including investing in the “Sir” company, the first Saudi brand for manufacturing electric cars, in addition to investing in the “Lucid” electric car company, which recently opened its first global factory for the production of electric cars in the Kingdom.

Given Pirelli's advanced global position in tire manufacturing, it will provide technical expertise and knowledge to support the development and operation of the new tire factory. This joint project embodies the Fund and Pirelli’s commitment to creating a leading brand locally and regionally that localizes tire manufacturing capabilities, which is considered an essential component of the integrated automobile manufacturing system.

The factory's production capacity is estimated at 3.5 million tires annually, as the factory contributes positively to the national economy, with its commitment to environmental sustainability. The project will be a pillar for attracting more qualitative investments to the Kingdom.

The project is in line with Pirelli's strategy to manufacture locally in its main markets, and the company will thus be the first high-level international tire manufacturer to launch its production operations in the Kingdom.

Mr. Yazid bin Abdul Rahman Al-Humaid, Deputy Governor and Head of the General Administration for Middle East and North Africa Investments at the Public Investment Fund, said: “The Public Investment Fund aims, through the joint project with Pirelli, to build production capabilities in the value chains of the vehicle and mobility sector, and to maximize opportunities for private sector contribution.” This cooperation also constitutes an important milestone in our efforts to diversify the national economy, enhance sustainability, and localize manufacturing capabilities in the Kingdom.”

For his part, Marco Tronchetti Provera, Executive Vice Chairman of Pirelli, said: “Entering the field of local manufacturing in the Kingdom represents a great opportunity for Pirelli, given the Kingdom’s position as one of the most promising markets in the world, and our focus on our high-quality products and tires for cars.” "We are happy to partner with the Public Investment Fund to achieve our common goals in the automotive sector."

To complete the agreement, official approvals are required from the relevant authorities and the terms of the agreement are met.

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About the Public Investment Fund:

The Public Investment Fund is one of the largest and most influential sovereign wealth funds in the world, and its Board of Directors is chaired by His Royal Highness the Crown Prince Mohammed bin Salman bin Abdulaziz, Prime Minister and Chairman of the Council of Economic and Development Affairs and Chairman of the Board of Directors of the Public Investment Fund - may God protect him. Since the year In 2015, the Board of Directors of the Public Investment Fund was reconstituted and linked to the Council of Economic and Development Affairs. The Fund also plays a pioneering role in advancing the transformation and diversification of the Saudi economy, in addition to its contribution to shaping the features of the future of the global economy. The Fund has established 90 companies since 2017. The Fund works to Building a diversified portfolio by entering into attractive, long-term investment opportunities in 13 strategic sectors at the local and international levels, as the Fund’s strategy aims, according to the Public Investment Fund Program 2021-2025 - one of the programs to achieve the Kingdom’s Vision 2030; To empower many promising sectors and contribute to increasing local content by creating partnerships with the private sector, in addition to pumping no less than 150 billion riyals annually into the local economy. It also works to transfer technologies and localize knowledge. To build a prosperous and sustainable economy in the Kingdom, and as the investment arm of the Kingdom; The Fund worked to enter into distinguished investments and build strategic alliances and partnerships with many prestigious international institutions and entities. Which contributes to achieving real, long-term value for the Kingdom that is consistent with the goals of Vision 2030. The Public Investment Fund has also created an operational governance model that highlights its mission and the main objectives assigned to it, which are in line with the best global practices followed, as the application of this model enhances the level of transparency and effectiveness in decision-making and progress. In the future.

© Press Release 2023