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US retailer has focused on expanding its stores and Sam’s Club warehouse outlets in the country

Walmart has cut its stake in Chinese ecommerce giant JD.com to zero, as the world’s largest retailer focuses on expanding its own brands in the country.

The US retailer disclosed in a filing to the US Securities and Exchange Commission that it had entirely disposed of its nearly 10 per cent holding in the ecommerce company.

Walmart reported owning 289mn shares of JD.com as of December 31, which would have been worth $4bn at the end of trading in New York on Tuesday.

JD.com separately said it had spent $390mn repurchasing its own shares in a transaction on Wednesday. Hong Kong-listed shares of the group fell by as much as 12 per cent in early trading.

Walmart first acquired a stake in the group in 2016 in exchange for the sale of its Chinese ecommerce site Yihaodian to JD.com. Walmart nearly doubled its holding later that year by continuing to invest in the Chinese group.

The deals spurred growing collaboration between the two retailers, including Walmart and its Sam’s Club unit launching stores on JD.com’s ecommerce platform and a delivery partnership in some Chinese cities. 

But JD.com has faced growing ecommerce competition in China from rising rival Pinduoduo as well as Alibaba. Goldman Sachs analysts estimate that PDD has now displaced JD.com as the second-largest ecommerce company in China.

JD.com increased revenues 1 per cent from a year earlier in the second quarter, bolstering its bottom line by cutting back on the discounts offered to shoppers.

“Walmart invested nearly 10 years ago when JD.com and the ecommerce market were growing really fast,” said Li Chengdong, the head of Chinese tech think-tank Haitun. “The stake allowed them to learn from JD. Now they are doing well on their own in China, so the strategic value of the stake has ended.”

Walmart has increasingly focused on building up its own China business, with its Sam’s Club warehouse outlets gaining popularity among China’s discerning, cost-conscious shoppers.

The US retailer said it would maintain co-operation with JD.com and that the sale “allows us to better focus on the strong development of China, including the operation of Walmart Supercenter and Sam’s Club, and allocate assets to other priorities”.

The company added that it “has achieved success in various markets around the world by adjusting its asset portfolio in a timely manner”.

The group’s China business sales grew 16 per cent to $17bn in its latest financial year ended January 31, though the market contributed to less than 4 per cent of total sales.

Walmart’s share disposal comes after JD.com’s other major partner, Chinese social media group Tencent, distributed nearly all of its 17 per cent stake in the group to shareholders in 2022.

JD.com did not immediately respond to a request for comment.

Poland’s big bet on a new airport

After years of debate, new project seen as the next big thing in the country’s economic development

Before it can become central and eastern Europe’s largest transport hub, Poland’s new airport could first test the ability of its feuding politicians to stay the course on a big infrastructure project. 

In late June Prime Minister Donald Tusk approved the Central Communication Port (CPK using its Polish acronym), the plan to build an airport in the heart of Poland near the village of Baranów, alongside a new high-speed rail network linking it to Warsaw 40km away, as well as Łódź and other more distant cities. The key reason to build the CPK is that Warsaw’s main Chopin airport is almost saturated and too close to the Polish capital to permit significant expansion.

The CPK’s promoters see several other benefits, including transforming the farming area around it into a new business region. On a national scale, after two decades during which Poland outpaced the growth of most other EU nations, the CPK is “the next big thing in Polish economic development”, giving the country a state of the art logistics platform to connect with its main trading partners, says Piotr Arak, chief economist at VeloBank. 

Even if not purpose built as a military base, the CPK should also provide Poland’s armed forces with another location from which to respond to Russian aggression. “Having the CPK is absolutely critical as a deterrent,” says Rajmund Andrzejczak, former chief of the general staff of the Polish armed forces.

Still, the CPK has already been debated for more than a decade and Tusk’s coalition is doing a U-turn on a project he denounced during his successful election campaign last year, when he replaced the rightwing Law and Justice (PiS) party in power.

At the time, Tusk called the CPK a “sick idea” of PiS to promote its ultranationalist agenda and a misspend of public money. After taking office in December, one of the Tusk government’s first decisions was to order a full audit of PiS’s draft plan.

However, checking the numbers proved surprisingly problematic. No independent firm tendered for a financial audit that also meant stepping into a political minefield. This left the government to do its own review.

Tusk’s administration now promises to build a bit slower but a bit better than PiS. The airport’s projected capacity has been cut to 34mn passengers a year from the 40mn targeted by PiS, while the CPK budget was slashed to 131bn zlotys (€30.7bn) from 155bn zlotys. The airport should open in 2032 — four years behind the original PiS schedule. 

But while the new airport’s benefits for Poland might appear compelling, there are still reasons to worry about its take-off. First, Tusk’s government is dithering over whether to retain the foreign consortium that PiS selected to help build the CPK last October, which comprises French construction company Vinci and Australia’s IFM Global Infrastructure Fund — the decision was announced only after PiS lost the elections to Tusk’s coalition. Poland’s infrastructure ministry now says that “both scenarios — having a foreign partner in such a venture or going alone — have their advantages as well as drawbacks”.

Since joining the EU in 2004, Poland has built some of Europe’s most modern motorways. Its rail and airport investment record is more patchy, however. A previous Tusk government bought Alstom’s Pendolino fast-trains a decade ago. But these trains continue to travel below their top speeds on most of the network because Poland has since struggled to upgrade its signalling and track infrastructure.

About 100km from Warsaw, Radom’s near-dormant airport also offers a cautionary tale. After Radom’s airport went bankrupt in 2018, PiS decided that building a new terminal and runway could revive the site. They were inaugurated last year, but only between one and three planes are now landing each day in reconstructed Radom.

Still, the government hopes the CPK will turn state airline LOT into a long-haul competitor for Lufthansa and Turkish Airlines, both of which now dwarf LOT. The Polish carrier wants to increase its fleet to not less than 100 by 2026 from around 80 now. But Polish aviation journalist Dominik Sipinski notes that by the time the CPK opens, the new airport may prove too big and arrive too late for the Polish airline to catch up with rivals.

Until then, the CPK will need to survive Poland’s divisive politics. There will be at least two more national elections before 2032, which gives time for whoever is in office to make more changes before cutting the inauguration ribbon. 

Saudi wealth fund brings era of easy money to an end

Once considered a cash cow by dealmakers, PIF has slowed spending on global investments, bankers say

For much of the past decade, Saudi Arabia has been a major draw for dealmakers, bankers and asset managers seeking capital as its ambitious sovereign wealth fund went on a multibillion-dollar global spending spree.

But as the kingdom reassesses its priorities and the $925bn Public Investment Fund shifts focus to huge domestic commitments, the era of Saudi Arabia being perceived as a source of easy money is drawing to a close.

“It is ending,” said a senior Dubai-based investment banker. “People are realising it.”

Fund managers, bankers and companies that sought to raise capital in the kingdom are already feeling the effects of the shift.

Money managers say Saudi officials have put many more conditions on mandates, often demanding the hiring of local employees and at least some use of funding for investment in domestic companies and projects.

Others are being told that for Riyadh to commit new funds, it wants to see reinvestment in the kingdom, bankers said.

“It is becoming more of a theme,” an insider at the wealth fund explained.

BlackRock, the US asset manager, did secure $5bn from the PIF to anchor a new investment firm in Riyadh, which it announced in April. But its mandate is focused primarily on developing the kingdom’s capital markets.

The PIF said in a statement to the Financial Times that it had a “robust investment process”, allowing it “to choose partners and advisers who are best suited for each mandate we pursue”.

“Investments made by PIF go through a process of multiple committees and are focused on its key sectors, in accordance with the fund’s mandate and strategy,” it said.

Companies are also no longer beating a path to Riyadh’s door in the hunt for cash at the pace they once were, bankers say.

“Client interest has reduced materially, partly because we are screening more carefully, partly because there’s not been a tremendous amount of success from these efforts and roadshows,” said the Dubai-based banker. “People realise it’s not just about showing up and expecting a cheque.”

It is a marked contrast to the early years of the PIF’s dramatic transformation from a sleeping state holding company with about $150bn in assets under management in 2015 into one of the world’s most active and ambitious sovereign funds.

The overhaul was driven by Crown Prince Mohammed bin Salman, who took over as the fund’s chair in 2015, giving it the task of steering Riyadh’s trillion-dollar plans to diversify the economy and project the kingdom on to the global stage.

As it sought to rapidly build up its foreign exposure from virtually zero to its target of 24 per cent of its portfolio, it made waves with a string of high-profile deals, including pumping $45bn into SoftBank’s Vision Fund in 2016 and $20bn into a Blackstone infrastructure fund the following year.

In the years since, it has splashed the cash in a diverse range of sectors from electric-car maker Lucid to its controversial LIV Golf venture, a cruise liner group, mining, sports assets and gaming companies.

It also poured tens of billions into US and European equity markets and injected $2bn into a private equity venture set up by Donald Trump’s son-in-law, Jared Kushner.

The frenzy of activity coincided with tightening liquidity in other parts of the world, marking out Saudi Arabia and other oil-rich Gulf states as go-to sources for funding.

That sentiment grew after Russia’s invasion of Ukraine sent energy prices to multiyear highs, creating a boom in the Gulf and helping Saudi Arabia post a budget surplus in 2022 — its first in almost a decade.

But since then, the kingdom has slashed oil production in a bid to stabilise softening crude prices. That has hit government revenues and returned the budget to a deficit with Riyadh facing massive financial commitments to fund development plans. Deals have also fallen through, bankers say.

“For the last eight years, Saudi Arabia has gone out to the rest of the world with an open hand of money. Now the fist is clenching and pulling back to the country,” said a London-based investment banker. “It’s part of the maturing strategy. They could not have gone on like this forever.”

According to filings at the US Securities and Exchange Commission, the PIF’s traded stocks in the US fell from about $35bn at the end of 2023 to $20.5bn on March 31, before stabilising in the second quarter at $20.6bn.

The PIF sold down its stake in BlackRock, and disposed of its holdings in Carnival, the cruise liner company, and entertainment group Live Nation.

Saudi officials say the kingdom’s ambitions have not changed and there is still significant activity taking place with work continuing on a string of megaprojects. But finance minister Mohammed al-Jadaan told a conference in April that Riyadh would “adjust” as required.

“We’ll extend some of the projects, we’ll downscale some projects, we’ll accelerate some projects,” he said.

An executive at a US-based asset manager added that Prince Mohammed was focused on building infrastructure.

“Saudi has shifted meaningfully to domestic growth projects,” the executive said. “They have a bold ambition of what they want to become.”

Another London-based banker said that with the financing outlook “not as comfortable as they want it to be, they’ve got to make some difficult choices”.

“That’s sensible and they are being slightly more mature, they are not going for broke. But it means it’s less lucrative for bankers,” he said.

“The other aspect is the Saudis are sick to the teeth of being treated just as a cash cow, and they are extremely suspicious of fee chasers. They want people to put skin in the game.”

He added that the shift in pace was a “cyclical issue” in line with falling oil revenues, saying the longer-term attraction of Saudi Arabia is “still pretty strong because they have a lot of catching up to do from a development perspective”.

The PIF insider said the fund was focusing more on strategic investments in contrast to the early years of its transformation when it was “looking to deploy money quickly in certain areas”.

“There is a pause in terms of spending, definitely global investments are not going to be there in a major way over the next two to three years,” said a Saudi executive. There would be exceptions, he explained, particularly in areas deemed to add value to the kingdom, such as manufacturing, artificial intelligence and technology.

“They are verbalising to banks it’s a very discrete moment,” the executive said.

Spending is continuing at home, with the PIF having a goal of investing at least $40bn a year in the kingdom as it oversees a series of megaprojects while developing new industries, including tourism, sports, mining and manufacturing.

Riyadh also has to prepare as the host of a string of international events, including the football Asian Cup in 2027, the Asian Winter Games in 2029 and Expo 2030. In addition, it is the sole bidder for the 2034 Fifa World Cup.

Bankers added that the PIF’s subsidiaries — including new airline Riyadh Air, gaming entity Savvy and mining company Ma’aden — are doing much of the investing themselves as they seek to meet their own targets.

“There’s a lot of activity in the PIF’s portfolio companies, not at the PIF level,” said the Dubai-based banker.

He added that bankers’ “wallets” were going to shift more from investment deals to financing as the government and the PIF raised debt — Riyadh has already raised about $37bn this year.

“It’s not necessarily a change of strategy, it’s an evolution,” he said.