Saudi Arabia set to become world’s biggest tech investor via new US$100bn SoftBank fund

Saudi Arabia is bidding to become the world’s number one technology investor after joining forces with Japan’s Softbank to create a giant US$100bn fund, which could become a dominant player in the industry. 

The mega-fund will be based in London and invest US$20 billion per year – equivalent to one fifth of total global venture capital investment into technology.

The news was released via a statement by SoftBank announcing the formation of the new fund.

It read: “SoftBank Group Corp. (SBG) announces that it will form a private fund for making investments in the technology sector globally, which is tentatively to be named “Softbank Vision Fund.”

Saudi Arabia’s top sovereign wealth fund, the Public Investment Fund (PIF), will be the lead investment partner with several other large, unnamed investors are in active talks on their participation and could bring the total size of the new fund up to US$100 billion, SoftBank said.

“Over the next decade, the SoftBank Vision Fund will be the biggest investor in the technology sector,” SoftBank chairman Masayoshi Son said in a statement.

Saudi Arabia

SBG said that it expects to invest at least US$25bn (approximately JPY 2.6 trillion) over the next five years. I also said that it has concluded a “non-binding memorandum of understanding on 12 October with the Public Investment Fund of the Kingdom of Saudi Arabia (PIF)”, under which PIF will consider investing in the fund and becoming the lead investment partner, with the potential investment size of up to US$45 billion (approximately JPY 4.7 trillion) over the next five years.

“The overall potential size of the Fund can go up to US$100bn (approximately JPY 10 trillion),” the statement concluded.

The move is part of a series of dramatic business initiatives launched by Riyadh this year as Saudi Arabia, with its economy hit by low oil prices, now moving huge financial reserves in an effort to move into non-oil industries.

World’s largest sovereign fund

As reported, Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman aims to expand the PIF, founded in 1971 to finance development projects in the kingdom, from US$160bn to about US$2 trillion, making it the world’s largest sovereign fund.

In June, the PIF departed from Saudi Arabia’s traditional strategy of low-risk investments and took a step into the tech world with the Uber investment.

That deal which illustrated how Riyadh now hopes to use its investments to develop the economy: Uber is a popular form of transport for Saudi women, who are banned from driving, and is creating badly needed non-oil jobs for Saudi citizens.

ABOUT THE AUTHOR
Gary Robinson
Deputy Editor, International Investment and Head of Video at Open Door Media Publishing. A fully qualified journalist and filmmaker with more than 20 years' financial services experience, both as journalist and originally as an IFA.

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