Saudi Arabia’s PIF takes 8.2% stake in cruise operator Carnival
Investment marks a rare sign of investor confidence in industry battered by coronavirus pandemic
Saudi Arabia’s Public Investment Fund has built an 8.2 per cent stake in struggling cruise operator Carnival, marking the Gulf fund’s latest high-profile direct investment after previous bets on companies such as Tesla and Uber.
The PIF’s position amounts to a $430m stake based on the US-traded company’s share price, which rose 23 per cent on Monday, but is still down by almost 80 per cent this year.
The PIF, which is used by Crown Prince Mohammed bin Salman to advance and diversify Saudi Arabia’s economic interests, revealed that it owned 43.5m shares in a regulatory filing signed by its head, Yasir al-Rumayyan, who is a close ally of the prince.
The purchase marks a rare sign of investor confidence in an industry that has been battered by the effects of the coronavirus pandemic, which has killed passengers and left cruise ships pleading with countries to be allowed to dock.
All big cruise operators have suspended operations until at least May and share prices have tumbled in response to their struggles.
Carnival has said it will burn through $1bn a month even with all its ships in dock, including payouts on customer deposits for cancelled bookings and future committed ship orders.
Last week it raised a total of $6.25bn in debt and equity from investors as it raced to secure funds to meet its cash needs for the next several months. The fundraising included the sale of $500m of new shares at $8 each.
Multiple people with knowledge of that deal confirmed that the PIF did not acquire its stake through the offering. That means the PIF bought the stake in the open market, with an unknown purchase price. It did not own any shares in Carnival before the start of 2020.
Shares in Carnival have fallen from $51 in January to less than $8 last week before rebounding to $10.44 on Monday afternoon.
The PIF has had a mixed record in direct investing, with a 2016 bet on ride-hailing group Uber still trading well below the $62.5bn valuation it bought in.
The fund’s now exited position in Tesla was revealed by the Financial Times in August 2018 and prompted its founder Elon Musk to make his “funding secured” tweet, which ultimately led Mr Musk and Tesla to face regulatory penalties.
A person close to the Saudi royal court said: “Any investor should look at global opportunities — the lessons learnt from 2008, buy undervalued assets.”
This person added that the PIF would be active in dealmaking in the coming weeks. “You will see a lot of acquisitions in the next few weeks. This is a good opportunity . . . keeping in mind their main effort right now should be geared to the domestic [economy].”