Saudi Arabia Doubles SoftBank Bet With Extra $45 Billion (1)
2018-10-06 07:21:17.828 GMT
By Riad Hamade, Matthew Martin and Archana Narayanan
(Bloomberg) -- 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 $45
billion investment in Son’s second massive Vision Fund.
The Public Investment Fund, or PIF, is set to make the
investment as it looks for ways to deploy a $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. and the initial public offering of state oil
company Saudi Aramco, according to PIF Chairman Mohammed Bin
Salman -- who is also Saudi Arabia’s Crown Prince.
The PIF wants to be a key investor in the second $100
billion investment fund that SoftBank Group Corp. Chief
Executive Officer Son plans to raise, Prince Mohammed said in an
interview with Bloomberg. That would bring the PIF’s
contribution to the two funds to $90 billion, he said.
“We have a huge benefit from the first one,” he said. “We
would not put, as PIF, another $45 billion if we didn’t see huge
income in the first year with the first $45 billion.”
Calls to SoftBank by Bloomberg News outside business hours
went unanswered.
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 $3.5 billion investment in Uber Technologies Inc., built
up an almost 5 percent stake in Tesla Inc. and then put $1
billion into its rival, Lucid Inc. The PIF also agreed to put
$20 billion into a U.S. infrastructure fund run by Blackstone
Group LP.
Big Returns
Speaking at an event in Riyadh last year, Son said that
investments made by the first Vision Fund were already paying
off. The fund had made a return of over 20 percent 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 in September that he plans to raise a new $100
billion fund every two or three years, and will spend around $50
billion annually.
In less than a year since the fund first began making
investments, it has already committed $65 billion to acquire big
stakes in Uber, WeWork Cos., Slack Technologies Inc. and GM
Cruise LLC.
Raising Money
Making another significant investment in SoftBank’s next
Vision Fund would help the PIF boost its assets, which have
already risen to more than $300 billion, Prince Mohammed said.
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 $300 billion, we’re getting close to $400
billion,” he said. “Our target in 2020 is around $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 $400 billion
by 2020. At the end of 2015, the fund had $152 billion of
assets, according to a document published last October outlining
its 2020 plan. That document also said the PIF aimed to generate
annualized nominal returns of 4 percent to 5 percent in the
years to 2020, up from 3 percent in 2014 to 2016.
The PIF raised $11 billion in its first ever borrowing
earlier this year as it looks to use leverage to boost its
returns. The fund is also set to receive around $70 billion to
$80 billion from the sale of its 70 percent stake in Saudi Basic
Industries Corp. to Saudi Aramco in 2019, Prince Mohammed said.
That would then be followed by proceeds from the initial public
offering of Aramco, which could raise another $100 billion, he
said.
--With assistance from Alaa Shahine, Donna Abu-Nasr, Vivian
Nereim and Sophie Jackman.
To contact the reporters on this story:
Riad Hamade in Dubai at rhamade@bloomberg.net;
Matthew Martin in Dubai at mmartin128@bloomberg.net;
Archana Narayanan in Dubai at anarayanan16@bloomberg.net
To contact the editors responsible for this story:
Stefania Bianchi at sbianchi10@bloomberg.net
Andrew Blackman, Riad Hamade
2018-10-06 07:21:17.828 GMT
By Riad Hamade, Matthew Martin and Archana Narayanan
(Bloomberg) -- 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 $45
billion investment in Son’s second massive Vision Fund.
The Public Investment Fund, or PIF, is set to make the
investment as it looks for ways to deploy a $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. and the initial public offering of state oil
company Saudi Aramco, according to PIF Chairman Mohammed Bin
Salman -- who is also Saudi Arabia’s Crown Prince.
The PIF wants to be a key investor in the second $100
billion investment fund that SoftBank Group Corp. Chief
Executive Officer Son plans to raise, Prince Mohammed said in an
interview with Bloomberg. That would bring the PIF’s
contribution to the two funds to $90 billion, he said.
“We have a huge benefit from the first one,” he said. “We
would not put, as PIF, another $45 billion if we didn’t see huge
income in the first year with the first $45 billion.”
Calls to SoftBank by Bloomberg News outside business hours
went unanswered.
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 $3.5 billion investment in Uber Technologies Inc., built
up an almost 5 percent stake in Tesla Inc. and then put $1
billion into its rival, Lucid Inc. The PIF also agreed to put
$20 billion into a U.S. infrastructure fund run by Blackstone
Group LP.
Big Returns
Speaking at an event in Riyadh last year, Son said that
investments made by the first Vision Fund were already paying
off. The fund had made a return of over 20 percent 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 in September that he plans to raise a new $100
billion fund every two or three years, and will spend around $50
billion annually.
In less than a year since the fund first began making
investments, it has already committed $65 billion to acquire big
stakes in Uber, WeWork Cos., Slack Technologies Inc. and GM
Cruise LLC.
Raising Money
Making another significant investment in SoftBank’s next
Vision Fund would help the PIF boost its assets, which have
already risen to more than $300 billion, Prince Mohammed said.
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 $300 billion, we’re getting close to $400
billion,” he said. “Our target in 2020 is around $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 $400 billion
by 2020. At the end of 2015, the fund had $152 billion of
assets, according to a document published last October outlining
its 2020 plan. That document also said the PIF aimed to generate
annualized nominal returns of 4 percent to 5 percent in the
years to 2020, up from 3 percent in 2014 to 2016.
The PIF raised $11 billion in its first ever borrowing
earlier this year as it looks to use leverage to boost its
returns. The fund is also set to receive around $70 billion to
$80 billion from the sale of its 70 percent stake in Saudi Basic
Industries Corp. to Saudi Aramco in 2019, Prince Mohammed said.
That would then be followed by proceeds from the initial public
offering of Aramco, which could raise another $100 billion, he
said.
--With assistance from Alaa Shahine, Donna Abu-Nasr, Vivian
Nereim and Sophie Jackman.
To contact the reporters on this story:
Riad Hamade in Dubai at rhamade@bloomberg.net;
Matthew Martin in Dubai at mmartin128@bloomberg.net;
Archana Narayanan in Dubai at anarayanan16@bloomberg.net
To contact the editors responsible for this story:
Stefania Bianchi at sbianchi10@bloomberg.net
Andrew Blackman, Riad Hamade