Kingdom teams up with Japanese conglomerate that made billions from Yahoo and Alibaba.
Saudi Arabia is making a bid to become the world’s number one technology investor after joining forces with Japan’s Softbank to create a giant $100 billion fund which could become a dominant player in the industry.
The mega-fund will be based in London and invest $20 billion per year – equivalent to one fifth of total global venture capital investment.
Hit by low oil prices, the middle-eastern kingdom has used its enormous financial clout to pursue a number of eye-catching business ventures this year, including a $3.5 billion investment in Uber.
“The Public Investment Fund is focused on achieving attractive long-term financial returns from its investments at home and abroad, as well as supporting the Kingdom’s Vision 2030 strategy to develop a diversified economy,” Deputy Crown Prince Mohammad bin Salman said in a statement.
Masayoshi Son, SoftBank’s chief executive said: “With the establishment of the SoftBank Vision Fund, we will be able to step up investments in technology companies globally. Over the next decade, the SoftBank Vision Fund will be the biggest investor in the technology sector.”
SoftBank has a track record of making billions from tech investments, including Yahoo and Alibaba. Earlier this year SoftBank bought Arm Holdings, one of the UK’s most successful technology companies, for £24 billion in Europe’s biggest ever tech acquisition.
The takeover was seen as the first test of Theresa May’s new interventionist industrial strategy. May had said she would not be afraid to step in to prevent the sale of important UK companies if it was in the national interest but declined to intervene in the SoftBank-ARM deal.
Prince Mohammad, who is also the Saudi defence minister, is aiming to stake out a vision for the kingdom’s future beyond the oil age by expanding its $160 billion sovereign wealth fund to $2 billion, making it the largest in the world.
An aggressive overseas investor, SoftBank runs a solar energy business in Japan and has taken a critical stance against nuclear energy after the 2011 Fukushima disaster. Its investment empire also includes financial technology and ride-hailing services.
“SoftBank may be trying to expand its ecosystem by investing in areas that may help to strengthen Arm’s business,” said Toshihiro Uomoto, Nomura’s chief credit strategist told the Financial Times. “It’s a natural move considering SoftBank has been shifting from its carrier business to the technology sector especially with the Arm acquisition.”
The company’s shares rose three per cent after the announcement on Friday.