PIF TO INVEST US$45B IN 2ND VISION FUND
Money likely to come from sale of Sabic stake, Aramco IPO
SAUDI Arabia is preparing to double-down on its bet that Masayoshi Son can pick the technology giants of the future. The country’s sovereign fund will make another US$45 billion (RM186.63 billion) investment in Son’s second massive Vision Fund.
The Public Investment Fund (PIF) is set to make the investment as it looks for ways to deploy a US$170 billion windfall it’s expecting over the next three to four years. That money would come from the sale of a stake in Saudi Basic Industries Corp (Sabic) and the initial public offering (IPO) of state oil company Aramco, according Saudi Crown Prince Mohammed Salman, who is also the PIF chairman.
The PIF wants to be a key investor in the second US$100 billion investment fund that SoftBank Group Corp chief executive officer Son plans to raise, said Prince Mohammed in an interview, here. That would bring the PIF’s contribution to the two funds to US$90 billion, he said.
“We have a huge benefit from the first one,” he said. “We would not put, as PIF, another US$45 billion if we didn’t see huge income in the first year with the first US$45 billion.”
Since unveiling a strategy in 2016 to transform the PIF from a sleepy domestic holding company into the world’s largest sovereign fund, it has made a series of bold investments. Many have focused on technology companies yet to make a profit.
In addition to its commitment to the first Vision Fund, the PIF made a US$3.5 billion investment in Uber Technologies Inc, built up an almost five per cent stake in Tesla Inc and then put US$1 billion into its rival, Lucid Inc.
The PIF also agreed to put US$20 billion into a United States infrastructure fund run by Blackstone Group LP.
Speaking at an event, here, last year, Son said investments made by the first Vision Fund were already paying off.
The fund had made a return of over 20 per cent in its first five months, he said.
That fund, which also raised money from one of Abu Dhabi’s sovereign funds and Apple Inc, is about four times the size of the largest venture capital fund ever created and bigger than any private equity fund in history.
Son told Bloomberg Businessweek last month that he planned to raise a new US$100 billion fund every two or three years, and would spend around US$50 billion annually.
In less than a year since the fund first began making investments, it has already committed US$65 billion to acquire big stakes in Uber, WeWork Cos, Slack Technologies Inc and GM Cruise LLC.
Making another significant investment in SoftBank’s next Vision Fund would help the PIF boost its assets, which have already risen to more than US$300 billion, said Prince Mohammed.
Currently the fund’s biggest assets are mostly local equities, including the stake in Sabic and holdings in Saudi Telecom Co and National Commercial Bank.
“We are now above US$300 billion, we’re getting close to US$400 billion,” he said. “Our target in 2020 is around US$600 billion. I believe we will surpass that target in 2020.”
That’s even higher than the target the PIF announced last year, when it said it wanted to grow its assets to US$400 billion by 2020.
At the end of 2015, the fund had US$152 billion of assets, according to a document published last October outlining its 2020 plan.
It showed the PIF aimed at an annualised nominal returns of four to five per cent in the years to 2020, up from three per cent in 2014 to 2016.