Saudi Arabia is preparing to double down on its bet that Softbank Group Corp CEO Masayoshi Son can pick the technology giants of the future.
The country’s sovereign wealth fund is to make another US$45 billion investment in Son’s second massive Vision Fund.
The Saudi Public Investment Fund (PIF) is set to make the investment as it looks for ways to deploy a US$170 billion windfall that it is 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, said fund chairman and Saudi Crown Prince Mohammad bin Salman.
The sovereign fund wants to be a key investor in the second US$100 billion investment fund that Son plans to raise, Mohammad said in an interview with Bloomberg.
That would bring the Saudi fund’s contribution to the two funds to US$90 billion, he said.
“We have a huge benefit from the first one,” he said. “We would not put, as PIF, another US$45 billion if we didn’t see huge income in the first year with the first US$45 billion.”
In addition to its commitment to the first Vision Fund, the Saudi fund made a US$3.5 billion investment in Uber Technologies Inc, built up an almost 5 percent stake in Tesla Inc and then put US$1 billion into its rival Lucid Inc.
The fund also agreed to put US$20 billion into a US infrastructure fund run by Blackstone Group LP.
Making another significant investment in Softbank’s next Vision Fund would help the PIF boost its assets, which have already risen to more than US$300 billion, Mohammad said.
“We are now above US$300 billion, we’re getting close to US$400 billion,” he said. “Our target in 2020 is around US$600 billion. I believe we will surpass that target in 2020.”
That is even higher than the target that the fund announced last year, when it said it wanted to grow its assets to US$400 billion by 2020.
At the end of 2015, the fund had US$152 billion of assets, a document published in October last year outlining its 2020 plan said.
That document also said that PIF aimed to generate annualized nominal returns of 4 percent to 5 percent in the years to 2020, up from 3 percent between 2014 and 2016.
The Saudi fund raised US$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 US$70 billion to US$80 billion from the sale of its 70 percent stake in Saudi Basic Industries Corp to Saudi Aramco in 2019, Prince Mohammad said.
That would then be followed by proceeds from the initial public offering of Aramco, which could raise another US$100 billion, he said.
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