Saudi Arabia investing billions in global technology fund

October 15, 2016

Jeddah, Oct 15: Public Investment Fund (PIF) has taken another strong step in its mission to support Saudi Vision 2030 with its move to set up a strategic partnership with SoftBank Group Corp. (SBG), according to top businessmen and analysts.

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“This is a bold move by the PIF to explore global opportunities into tech ventures,” Basil Al-Ghalayini, CEO of BMG Financial Group, told Arab News.

His comments came as the PIF joined forces with Japanese telecom firm SoftBank to form a tech investment fund worth as much as $100 billion, making it one of the largest on the planet.

PIF — Saudi Arabia's sovereign wealth fund — is expected to put up as much as $45 billion of the money, with SoftBank throwing in at least $25 billion.

PIF, under the leadership of Deputy Crown Prince Mohammed bin Salman, has revised its long-term investment strategy to coincide with the country’s Vision 2030.

Saudi authorities have described SoftBank’s "strong investment performance" as a key reason for investing in the new tech fund.

Ihsan Bu-Hulaiga, head of the Joatha Consulting, told Arab News that the new fund reflects the implementation of PIF’s new strategy after restructuring and expanding its financial might from $160 billion to $2 trillion.

He said: “The engagement of PIF with SoftBank is more a meeting of mindsets than a mere financial collaboration.”

Bu-Hulaiga added: “In perspective, PIF compliments with SoftBank experience to provide benefits to highly selective global technology start-ups.”

In a statement, SBG said it will use its deep operational expertise and network of portfolio companies in order to add value to the fund’s investments.

“Making such investments is critical for developing a stake in the most rapidly developing and transformative sector of the global economy,” a Gulf analyst, who declined to be named, told Arab News.

“The key is to build linkages that maximize the broader benefits for the Saudi economy. This is a positive beginning but what matters is all that is built around it: Partnerships, alliances, knowledge transfer, research, etc,” he added.

The SBG statement said the fund will be managed in the United Kingdom by a subsidiary of SoftBank Group Corp. and will deploy capital from SBG and investment partners.

SBG expects to invest at least $25 billion over the next 5 years. SBG has concluded a non-binding memorandum of understanding on Oct. 12, with the Public Investment Fund under which the PIF will consider investing in the Fund and becoming the lead investment partner, with the potential investment size of up to $45 billion over the next five years.

In addition, a few large global investors are in active dialogue to join SBG and PIF to participate in this fund. The overall potential size of the fund can go up to $100 billion, according to the SBG statement.

“The Public Investment Fund is focused on achieving attractive long-term financial returns from its investments at home and abroad, as well as supporting the Kingdom’s Vision 2030 strategy to develop a diversified economy. We are delighted to sign this MOU with SBG given the long history, established industry relationships and strong investment performance of SBG and Masayoshi Son,” the Saudi deputy crown prince was quoted as saying in the statement.

Masayoshi Son, chairman & CEO of SoftBank Group Corp., commented: “With the establishment of the SoftBank Vision Fund, we will be able to step up investments in technology companies globally. Over the next decade, the SoftBank Vision Fund will be the biggest investor in the technology sector. We will further accelerate the Information Revolution by contributing to its development.”

Rajeev Misra, head of strategic finance, SoftBank Group, is leading the fund project for SBG.

SBG has engaged former Deutsche banker Nizar Al-Bassam and ex-Goldman partner Dalinc Ariburnu for the project. PIF also had its own team of experts engaged.

Commenting on the tech investment fund, Sami A. Al-Nwaisir, chairman of Al-Sami Holding Group, told Arab News: “The PIF’s move is consistent with Saudi Vision 2030 in order to build the largest sovereign fund and, at the same time, increase the possibility of generating more revenues to the Saudi budget.”

The general role of the PIF is to function like a tool in framing fiscal policies in order to bring stability to the economy and provide liquidity, he pointed out.

Al-Ghalayini also said that the PIF’s partnership goes in line with the government's Vision 2030 program and plans to diversify revenue away from oil.

“But with such a fund size of $100 billion, it will be worth watching where the fund plans to deploy this capital,” he said.

“Furthermore, with such a supply into the Venture Capitals’ funding channels, valuations of target companies might go up,” he added.

Economists say the PIF’s latest move strengthens Saudi Arabia’s ambitious plan to create a huge sovereign wealth fund that would be worth SR7 trillion ($1.9 trillion) by 2030, which would make it by far the biggest in the world.

PIF earlier invested $3.5 billion in US ride-hailing firm Uber.

At an annual rate of $20 billion, the new London-based fund could at current levels account for roughly a fifth of global venture capital investment, Reuters reported.

In the year to September, venture capital-backed companies globally raised $79 billion, according to data from KPMG and CB Insights, with tech start-ups attracting the lion's share of that cash.

“SoftBank Chairman Masayoshi Son is very good at looking for companies with big growth prospects, and that will create fierce competition," said Hiroyuki Kuroda, secretary general of the Venture Enterprise Center in Japan, was quoted as saying in the Reuters report.

SoftBank, a $68 billion telecommunications and tech investment behemoth, has also been stepping up investment in new areas. It agreed to buy UK chip design firm Arm Holdings in July in Japan's largest ever outbound deal.

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News Network
November 12,2024

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The Palestinian Hamas resistance movement says its fighters have killed at least 20 Israeli soldiers in northern parts of the besieged Gaza Strip in just two days, in retaliation for the occupying regime’s genocidal war on the Palestinian territory.

In a statement on Monday evening, Hamas said that fighters of its military wing, al-Qassam Brigades, “killed at least five occupation soldiers” in northern parts of the coastal territory earlier in the day.

It added that Hamas fighters also killed 15 Israeli soldiers in the war-ravaged region on Sunday.

The resistance movement’s “qualitative operation … confirms once again the failure of the criminal Zionist entity to suppress and eradicate the Palestinian resistance, which continues to direct qualitative strikes against its terrorist soldiers,” Hamas further said on its Telegram channel.

Palestinians have increased their resistance operations in the face of intensified Israeli aggression in northern Gaza that has claimed the lives of more than 1,000 over the past weeks.

“Our valiant resistance is waging a war of attrition with the criminal enemy, inflicting daily losses on its soldiers and vehicles, and all of [Israeli prime minister Benjamin] Netanyahu’s bets and dreams of achieving any of his goals are failing,” the Gaza-based resistance movement added.

Hamas also vowed that Israel’s ongoing crimes and aggression against Gaza would be met with increased resistance and painful strikes, which will continue until the aggression against Palestinians ends and the regime fully withdraws from the blockaded territory.

As the war in Gaza enters its 14th month, the Health Ministry reports that Israeli attacks have killed at least 43,603 Palestinians and wounded 102,929 others.

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News Network
November 15,2024

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Iran’s Islamic Revolution Guards Corps (IRGC) has killed or captured 69 terrorists linked to the Israeli spy agency Mossad during a major counterterrorism drill in the country's southeast, its spokesman says.  

General Ahmad Shafaei, the spokesman for the “Martyrs of Security” drill, said Friday that a total of 23 terrorists have been killed and another 46 arrested in various clean-up operations ever since the IRGC Ground Force launched it in the Sistan and Baluchestan province on November 1.

Seven terrorists have also turned themselves in during the period.

“The undeniable fact about terrorists is that they rely on arrogant powers, particularly the intelligence service of the wicked and vicious Zionist regime," Shafaei said.

“Unfortunately, weapons and munitions at terrorists’ disposal are among the most sophisticated ones in the world. This accounts for their heavy dependence.” 

The official stated that several members of the disbanded terror teams were non-Iranian nationals, who had been hired by foreign intelligence agencies to carry out acts of sabotage and terror inside Iran.

In a most recent operation, six terrorists were arrested and four others were eliminated, three of whom were non-Iranians, he added. 

On October 26, ten members of Iran's law enforcement forces were killed in a terrorist attack in the Gohar Kuh district of Taftan in the Sistan and Baluchestan province.

The so-called Jaish al-Adl terrorist group claimed responsibility for the assault, which was one of the deadliest in the province in recent months.

The group has carried out numerous terrorist attacks in Iran, primarily in Sistan and Baluchestan.

Its tactics include the abduction of border guards as well as targeting civilians and police stations within the province to incite chaos and disorder.

In January, Iran launched a military operation during which the headquarters of the Pakistan-based terrorist group was targeted in missile strikes, destroying its infrastructure.

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News Network
November 7,2024

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The Israeli regime has killed at least 40 people during new airstrikes against eastern Lebanese areas, besides targeting the country’s capital Beirut with fresh acts of aggression.

Lebanon’s health ministry announced the fatalities on Wednesday, saying 53 other people had also been wounded during the aerial attacks that targeted the country’s Bekaa Valley, including the city of Baalbek.

In early Thursday, the regime was also reported to have attacked Beirut’s southern suburbs, including a site adjacent to Rafiq Hariri International Airport.

The attacks came after the regime issued short-notice evacuation orders apparently directed at the residents of the areas, claiming that the areas contained facilities belonging to Lebanon’s Hezbollah resistance movement.

Tel Aviv has been using similar claims on countless occasions since last October, when it markedly intensified its deadly acts of aggression against Lebanon, in order to try to justify the escalation. Hezbollah has, however, invariably refuted the claims.

Also on Wednesday, the United Nations warned in its most recent flash report on the humanitarian crisis caused by the Israeli atrocities targeting Lebanon that the aggression had “reached a critical point.”

The attacks have claimed the lives of more than 3,000 people, which was “58 percent more than the 1,900 fatalities” that were caused by the regime’s 2006 war against Lebanon, the report said.

“Additionally, an estimated 1.3 million people have been displaced, both within Lebanon and into neighboring countries, 33 percent more than the number of people displaced in 2006,” it added.

Women comprised the majority of those who had been rendered homeless within Lebanon as a result of the Israeli attacks, the report noted.

It also regretted that the Israeli attacks had featured 78 assaults on healthcare facilities across the country that had claimed the lives of 130 health workers and injured 111 others.

In response to the aggression, Hezbollah has been staging hundreds of retaliatory strikes against the occupied Palestinian territories and the Israeli forces trying to advance on southern Lebanese areas.

The movement has vowed to sustain its strikes until the regime ends the escalation.

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