Saudi Arabia plans to create a new sovereign fund to manage part of its oil wealth and diversify its investments, and has asked investment banks and consultancies to submit proposals for the project, according to people familiar with the matter.
Plunging oil prices have strained Saudi Arabia's finances. The kingdom's state budget deficit is at a record high and net foreign assets dived more than $100 billion in 15 months.
The new fund could change the way tens of billions of dollars are invested and affect some of the world's leading asset managers, particularly in the United States, where the bulk of Saudi Arabia's foreign assets are managed.
"Keeping the foreign reserves at a good level is necessary to maintain a solid financial position and support the riyal," said one of the sources.
They said the Saudi government did not tell them the size of the planned new fund. Another source said the Saudi government sent out a "request for proposal" to banks and consultants late last year, seeking ideas on how to structure a new fund. The sources asked not to be identified because the plans are confidential.
They said the Saudi government did not tell them the size of the planned new fund.