Riyadh – Mubasher: The Public Investment Fund (PIF), Saudi Arabia’s sovereign wealth fund, signed a joint venture (JV) agreement with Italy’s global tyre manufacturer Pirelli Tyre to localise production and capabilities in the tyre industry and technologies.
Upon the agreement, which was signed during the seventh edition of the Future Investment Initiative (FII) conference, PIF aims to establish Saudi Arabia as a global automotive manufacturing hub, according to a press release.
PIF will hold a 75% stake in the new $500 million JV, while Pirelli will own the remaining 25% and act as a strategic technology partner as well as a technical and commercial assistance provider to support the development of the project.
The factory is scheduled to start production in 2026 under the Pirelli brand in addition to manufacturing and marketing tyres under a new local brand that will target the domestic and regional market. It is set to deliver an annual out capacity of 3.50 million units.
Meanwhile, the project is forecast to have a neutral impact on Pirelli’s deleveraging targets to 2025. Through the JV, the Italian firm will become the first tier 1 tyre maker to directly source production in Saudi Arabia.
Deputy Governor and Head of MENA Investments at PIF, Yazeed Al Humied, said: “Through this JV with Pirelli, PIF is building production capabilities in the automotive and mobility value chain and enhance opportunities for private sector contribution.”
Al Humied added: “This collaboration marks another pivotal milestone in our journey to diversify the economy, enhance sustainability and localize manufacturing capabilities in Saudi Arabia.”
Among its major investments in the sector, PIF and Hyundai Motor Company recently announced a $500 million JV to establish a state-of-the-art automotive manufacturing plant in Saudi Arabia.
In addition, the sovereign fund launched Tasaru as the National Automotive and Mobility Investment Company to localise automotive supply chains and manufacturing capabilities.
Executive Vice Chairman of Pirelli, Marco Tronchetti Provera, said: “Accessing local production in Saudi Arabia, one of the most promising markets today, in line with our positioning in High Value and electric, represents a great opportunity for Pirelli. Capturing it alongside a partner like PIF with its plans to enable the automotive sector.”
PIF stated that the closing of the transaction is yet subject to obtaining approvals from the relevant authorities in addition to satisfying certain conditions under the agreement.
