Softbank Group Corp plans to invest as much as US$25 billion in Saudi Arabia over the next three to four years, people familiar with the matter said.
The company aims to deploy up to US$15 billion in a new city called NEOM that Crown Prince Mohammed bin Salman plans to build on the Red Sea coast, the people said.
The company’s Vision Fund also plans investments of as much as US$10 billion in state-controlled Saudi Electricity Co, the people said, adding that Softbank will also have some of its portfolio companies open offices in NEOM.
The plans would bolster the crown prince as he cracks down on alleged corruption via a purge that has rattled investors. The infusion of cash would also aid the country as it seeks to diversify its economy away from oil.
Softbank shares yesterday rose 2.2 percent in Tokyo trading, while shares in Saudi Electricity on Wednesday fell 0.3 percent in Riyadh trading.
The state utility has a market value of about US$26.6 billion after a 6.1 percent increase in its share price this year.
Softbank founder Masayoshi Son has been bolstering ties with Saudi Arabia since raising US$45 billion from the country’s Public Investment Fund for a US$100 billion fund this year.
He was one of the main guests that the wealth fund hosted at a conference in Riyadh last month that brought together titans of global finance seeking a piece of the action from the transformation of the economy.
The NEOM project includes a bridge spanning the Red Sea, connecting the proposed city to Egypt and the rest of Africa. About 25,900m2 have been allocated for the development of the urban area that is to stretch into Jordan and Egypt.
For Softbank, the potential Saudi Arabian investments come as it expands from technology investments to asset management.
The Tokyo-based company has used cash from its telecommunications operations to invest in everything from UK semiconductor-design company ARM Holdings PLC to chat service Slack Technologies Inc and coworking WeWork Cos.
Son is now planning additional acquisitions to potentially create a US$300 billion asset management arm, Bloomberg News reported in September.
Softbank’s plans to merge Sprint Corp with T-Mobile US Inc were terminated this month.
Son said he ended the talks to combine the third and fourth-largest wireless operators in the US because he did not want to give up control of Sprint.
A wireless telecommunications network would be critical to support investments that Son plans to make via the Vision Fund.
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