Saudi wealth fund to invest $65bn with foreign asset managers
PIF to back $40bn Blackstone vehicle that aims to upgrade ageing US infrastructure
Saudi Arabia’s sovereign wealth fund plans to invest $65bn with foreign asset managers, underscoring the dramatic transformation under the leadership of Mohammed bin Salman, the country’s powerful deputy crown prince.
Saudi’s Public Investment Fund is to place $20bn with Blackstone, the alternative asset manager, becoming the anchor investor in a new $40bn infrastructure fund that will focus on upgrading US assets.
The PIF at the weekend also finalised plans to commit $45bn to a new $90bn technology investment fund to be managed by SoftBank, the Japanese tech-to-telecoms conglomerate led by Masayoshi Son, its billionaire founder.
The non-binding agreement between Blackstone and the PIF was announced on the eve of the arrival of Donald Trump, US president, in Riyadh on his first foreign trip since his inauguration.
The two sides stated that the terms were not finalised and emphasised that the agreement was the culmination of talks that predated the US president’s election.
“[The PIF] is creating a new infrastructure business with Blackstone that will benefit the PIF, Blackstone and America,” a person close to the Saudi fund said.
When Riyadh completes the initial public offering of Saudi Aramco, scheduled for 2018, it is the PIF that is expected to reap the rewards — with the fund expected to be the depository for a potential $100bn from a 5 per cent sale of the state oil company.
The PIF was a little known, and largely inactive, holding fund for decades but a sudden burst of dealmaking, and the central role it is being given in the kingdom’s reform plans, have put it on course to become one of the world’s most powerful sovereign wealth funds.
Stephen Schwarzman, chief executive of Blackstone, who also heads Mr Trump’s economic advisory group, has been courting the Saudis for some time, said one person with knowledge of the deal, who added: “With the Saudis, the negotiation never ends.”
Under the arrangement, the PIF will become a passive investor in the new vehicle, while Blackstone will seek to raise at least $20bn from other investors.
“Through the equity in this vehicle and additional debt financing, Blackstone expects to invest in more than $100bn of infrastructure projects, principally in the US,” the two groups said.
Yasir Al Rumayyan, the PIF’s managing director, said: “This potential investment reflects our positive views around the ambitious infrastructure initiatives being undertaken in the US.”
The announcement was one of several deals — focused on arms and investment valued at between $280bn and $380bn — unveiled, with dozens of US business leaders accompanying Mr Trump in Saudi Arabia.
PIF was advised by M Klein and Company, an advisory firm founded by Michael Klein, a former Citigroup dealmaker.