Business
Saudi Arabia Is On A High-stakes Mission To Buy The World
In the months before Mohammed bin Salman celebrated his 30th birthday nearly a decade ago, the yet-to-be anointed Crown Prince of Saudi Arabia was gifted a vital key to unlocking the kingdom’s future: full purview of its Public Investment Fund.
. . . Saudi Arabia’s Public Investment Fund, led by Crown Prince Mohammed Salman, is going global.
. . . The sovereign wealth fund is investing in everything from Uber and Blackstone to Heathrow and LIV Golf.
. . . The verdict is out on just how successful it will be in its global investment spree.
Back in 2015, MBS became chairman of the sovereign wealth fund established in 1971 by a former king at a time when it was ready to be transformed. A slow-moving cog of the state no more, PIF was ready to become an investment juggernaut with global presence.
It’s a task the fast-rising royal hasn’t shied away from. PIF, officially led by governor Yasir Al-Rumayyan, has been stepping up its mission to invest in high-profile assets globally in recent years to help fulfill its mission of reducing Saudi Arabia’s economic dependence on oil.
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That mission, a fundamental part of an ambitious program called Vision 2030 that MBS is in charge of, depends in part on how successful the PIF is in generating returns from its big bets overseas — and leveraging those bets to build hot new industries at home.
“MBS’ personal ambition is very much to make Saudi Arabia a highly visible and internationally respected post-oil economy,” Steffen Hertog, associate professor at the London School of Economics, told Business Insider. “The PIF is by far his most important vehicle in this endeavor.”
But as PIF spreads its wings, it is becoming increasingly unclear as to just how successful it stands to be beyond the Gulf.
A look at the PIF’s portfolio presents a show reel of some of the most prolific names in global business.
In the tech sector, it has pumped $3.5 billion into Uber, poured $45 billion into SoftBank’s Vision Fund, taken a 60% stake in Tesla rival Lucid, and become majority owner of augmented reality startup Magic Leap.
Beyond that, it has pumped billions of dollars into LIV Golf, led a $415 million takeover of Newcastle United, backed up a Blackstone infrastructure fund with $20 billion and invested in Carnival, the world’s biggest cruise operator. In June, PIF expanded its stake in London’s Heathrow Airport.
Figures published in July by GlobalSWF, a data firm tracking sovereign-wealth-fund activity, found that PIF deployed more capital in the first half of 2024 than all other state-owned investors, which collectively invested close to $100 billion in the six-month period.
According to LSE’s Hertog, PIF’s attraction to high-profile brands isn’t just about making itself more visible to the West. “These for the most part are corporates active in sectors that the PIF and MBS see as key for Saudi Arabia’s domestic economic diversification.”
To make these deals happen, the kingdom has been busy doing a lot of courting.
In February, it backed a two-day conference in Miami, where the likes of Blackstone leader Stephen Schwarzman and Donald Trump’s son-in-law Jared Kushner were billed as speakers. In October, the kingdom will be prepared for the global elite to descend on capital city Riyadh for its “Davos in the desert” investment conference.
The event, which has previously attracted the likes of JP Morgan and BlackRock CEOs Jamie Dimon and Larry Fink, has proven controversial in the past. MBS’s alleged role in the murder of journalist Jamal Khashoggi in 2018, which he denies having involvement in, gave some dealmakers pause for thought.
That said, the world’s corporate elite appear to be looking past the incident as time passes — something the Saudis seem to be aware of. This year’s theme, “Infinite Horizons,” offers a nod to the global scope it has in mind for its future.
For global companies, fund managers, and bankers, Saudi Arabia’s wealth has been a big draw at a critical time. While other investors have exercised caution in the face of a higher interest rate environment, the kingdom has kept its money flowing.
That’s partly because the fund has set a target of $2 trillion in assets under management by the end of the decade, and is racing against the clock to meet the deadline for its ambitious Vision 2030 program.
Saudi Arabia also finds itself locked in a tense rivalry with other economic powerhouses in the region such as the United Arab Emirates, where funds such as Mubadala and G42 have been busy securing their own big international deals. Bragging rights are on the table.
However, while the Saudis prepare to continue flashing their cash abroad, the PIF faces some risks.
For one, the fund has had to learn the hard reality of going big, as a number of its high-profile investments overseas have struggled financially. Earlier this month, for instance, PIF had to plug a funding gap for Lucid by pumping in an extra $1.5 billion.
The electric vehicle maker first raised more than $1 billion from the Saudis in 2018 after PIF’s talks with Elon Musk to take Tesla private fell through, but has struggled with a high burn rate and waning demand for EVs.
PIF has also had to backstop another company. According to filings released in the UK this month, the fund has put $750 million into Magic Leap since the start of 2023, as it struggling to take its immersive reality headsets mainstream.
For Hertog, though companies like Lucid have “fallen on hard times” — and other bets from PIF on the likes of the SoftBank Vision Fund have “indeed not done well” — it is still too early to say how the overall performance will turn out. The fund did swing to an annual profit in 2023 following an $11 billion loss the previous year, Bloomberg reported, though many bets are still in their early days.
“There are inherent risks in investing in new sectors so what matters is not individual failures but the performance of the whole portfolio,” Hertog said.
PIF’s tanglings with political figures are also raising concerns. Donald Trump’s son-in-law Kushner, who started private equity firm Affinity Partners in 2021, received a $2 billion commitment from PIF for its debut fund, with that commitment now facing an investigation by Senate Finance Committee chair Sen. Ron Wyden.
In a letter published in June, the senator raised concerns that PIF and other Middle Eastern funds were “using payments to Affinity executives as a means to influence Kushner and other politically powerful individuals.”
For Abdullah Alaoudh, a director at the Middle East Democracy Center, it seems clear that buying “a lot of influence” — or “whitewashing” as he puts it — is a key part of the fund’s deal-making overseas. If potential partners can gloss over some of its more controversial activities, such as the Kingdom’s war in Yemen, it’ll have an easier time seeing deals through.
As Hertog notes, it’s worth remembering that PIF’s main priority remains its domestic portfolio. “While some domestic investments have been pruned, the fund’s main ambition is domestic diversification,” he said.
Still, Saudi Arabia seems intent on making its mark on the global stage through the PIF. The world will be keeping watch.
The PIF did not immediately respond to a request for comment from BI.
Credit – Business Insider Africa
Following the marginal reduction of the pump prices of premium motor spirit (PMS) by the Dangote Petroleum Refinery and the Nigerian National Petrol Company Limited (NNPC Ltd), civil society groups have reacted by calling for further downward review.
Recall that the Dangote Petroleum Refinery had announced a partnership with MRS Oil and Gas to offer petrol at N935 per litre at retail outlets, while it reviewed the ex-depot price from N970 to N899.50 per litre.
The move, saw state oil major, the Nigeria National Petroleum Company peg its retail prices at N965/litre.
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However, the civil society groups are of the opinion that the price reduction, fall short of expectations.
According to the Chairman, Centre for Accountability and Open Leadership, Debo Adeniran, the reduced price of N935/litre was still expensive and unsatisfactory.
He pointed out that petrol was just one of the products coming out of crude and that both government and private business could still give out free petrol to citizens while making huge profits from the other products.
In his words, “Well, we believe that if NNPC and the private sector actually give out PMS for free, they will still not run their business at a loss, because the other derivatives of petroleum products can still serve them, and can still make them to break even. So, even at that N900 and something, it’s still expensive.
“Dangote has kind of mooted the idea that it could drop to as low as N650. And if he has mulled this, then it means that it is the state, it is the NNPC that will have been the clog in the wheel of such progress. And you know also that we expected that fuel prices, especially PMS prices, will drop below N200 when Dangote was expected to come on stream.
“So, it’s unfortunate that we are still talking about over N900 and they want us to jump up and rejoice for that. That is not satisfactory. They should just let us see the breakdown of their production cost and why it’s still there. I mean, there are countries like Libya under Gaddafi that gave out PMS for free and they didn’t run anything at any loss. So, I believe that it can still go further down.”
On his part, the Executive Director of the Civil Society Legislative Advocacy Centre, Ibrahim Rafsanjani, commended the reduction of fuel prices by the NNPC and Dangote, but said the government could still reduce the price.
“Dangote’s own is about N899 or something like that. Well first and foremost, we are happy that there is a little reduction in the prices. But also based on analysis and based on facts and evidences, we believe that it is possible for the Nigerian government to further reduce the prices.
“Because if a private company can reduce the price and it still makes profit, we wonder why government-owned enterprises cannot really pity its citizens,” he said.
The Central Bank of Nigeria (CBN) has announced a significant growth in the country’s economy, with a 3.46% increase in gross domestic product (GDP) in the third quarter of 2024.
This marks the third consecutive quarter of expansion, up from 3.19% in Q2 2024 and 2.54% in Q3 2023.
According to the newly published Q3 economic report, Nigeria’s GDP output rose to ₦20.115 trillion, reflecting a notable improvement from ₦18.285 trillion in the previous quarter.
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The CBN attributed this growth primarily to the performance of the non-oil sector, which grew by 3.37% compared to 2.80% in Q2 2024.
The report highlighted transportation, crop production, and other sub-sectors such as financial & insurance services, information & communication, trade, and real estate as major contributors to the expansion.
The non-oil sector accounted for 3.18 percentage points of the total growth rate.
“The expansion of the non-oil sector was driven by the performance of the financial & insurance, information & communication, crop production, trade, transportation & storage, and real estate sub-sectors,” the report stated.
Despite the economic growth, challenges persist. Inflation, particularly in food prices, remains a significant concern, standing at 39.93% as of November 2024.
Rising food and energy costs have also impacted transportation expenses, with intercity bus fares increasing by 20.23% year-on-year to ₦7,117.17 in July 2024, according to the National Bureau of Statistics.
Furthermore, the cost of petroleum, now exceeding ₦1,000 per litre, has driven up logistics and transportation expenses, adding pressure to households and businesses alike.
The CBN acknowledged these challenges, noting that the growth was achieved despite headwinds such as high inflation and rising operational costs.
Enhanced security measures in the Niger Delta have boosted domestic crude oil production, while restrictive monetary policies have helped moderate inflation in some areas.
“The growth recorded in the country is a result of continued efforts to improve the business environment, streamline cumbersome business processes, and deepen the quality of business infrastructure,” the CBN noted.
However, the report comes amid concerns over businesses exiting Nigeria due to persistent economic challenges.
Asharami Synergy, a leading downstream energy solutions provider, has demonstrated its commitment to community development and education by donating essential furniture to Gaskiya Junior School in Ijora, Lagos, Nigeria.
Biztellers reports that the social responsibility initiative was executed in collaboration with Sahara Group Foundation – the social impact vehicle of global energy conglomerate, Sahara Group.
It was gathered that the initiative is part of Asharami Synergy’s ongoing efforts to support education in communities.
The donation includes classroom desks and chairs for the JSS1 classes.
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CEO of Asharami Synergy, Nomnso Dike, said the project will create a more comfortable and functional learning environment and enhance student performance.
“We are delighted at the opportunity to support the attainment of Sustainable Development Goal (SDG) 4, which focuses on ensuring inclusive and equitable quality education. It has been a privilege to collaborate with the management and students of Gaskiya Junior School to deliver this project, and we look forward to future opportunities to enhance academic performance in this historic institution,” Dike said.
According to him, Asharami Synergy’s education-focused social impact initiatives have benefitted over 10,000 individuals. They focus on building capacity and providing the resources necessary to help students learn and grow sustainably.
“Education is the foundation of a brighter future, and at Asharami Synergy, we believe that every child deserves a learning environment that inspires and empowers them” he noted, adding, “This donation is not just about providing furniture; it’s a reminder to the students that their dreams are valid, and we are committed to helping them achieve their goals.”
Vice Principal Academic of Gaskiya Junior School, Sola Oladokun, commended Asharami Synergy for the donation, noting that it would inspire students to perform better with “increased concentration and fewer distractions”.
“These desks and chairs are a game-changer for our students. It’s heartwarming to see their excitement, and as teachers, we are equally thrilled because this will make teaching and learning more effective. We are incredibly grateful to Asharami Synergy and Sahara Group Foundation for this thoughtful intervention,” she added.
Two representatives of the students, Akin Moses and Chukwudi Gift, at the event said the donation would increase their “desire to dream bigger and concentrate better during lessons”.
Also speaking at the commissioning, COO at Asharami Synergy, Adekanmi Adesola, said, “What started as an opportunity to support the communities that host our operations has now come full circle. This donation directly impacts the lives of these students, and we are proud to bring smiles to the faces of the students and teachers.”
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