SoftBank planning up to US$25b in Saudi investments

[LONDON] SoftBank Group Corp plans to invest as much as US$25 billion in Saudi Arabia over the next three to four years as the Japanese company run by Masayoshi Son deepens investment ties with the kingdom, according to people familiar with the matter.

SoftBank 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, asking not to be identified as the information is private. The Japanese company's Vision Fund also plans investments of as much as US$10 billion in state-controlled Saudi Electricity Co as part of efforts to diversify the utility into renewables and solar energy, the people said. SoftBank also will have some of its portfolio companies open offices in Neom, they said.

The plans by SoftBank would bolster the crown prince as he cracks down on alleged corruption via a purge that has rattled investors. The infusion of cash also would aid the country as it seeks to diversify its economy away from oil. To put the magnitude of SoftBank's plans into context, all foreign direct investment in Saudi Arabia totaled US$7.45 billion last year, according to data from the Organization for Economic Cooperation and Development.

A representative for SoftBank declined to comment. A Saudi Electricity spokesman said the company didn't have an immediate comment.

Mr 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 the wealth fund hosted at a conference in Riyadh in October that brought together titans of global finance who are seeking a piece of the action from the transformation of the economy. The Public Investment Fund didn't immediately respond to a request for comment.

SoftBank's Vision Fund may buy a significant stake in Saudi Electricity, according to a memorandum of understanding with the Saudi fund unveiled last month. Mr Son also has said he's looking at making investments in Neom, without specifying the amount.

Saudi Arabia has said the Neom project will be backed by more than US$500 billion from the Saudi government, its sovereign wealth fund and local and international investors, according to a statement at last month's business summit. The plan includes a bridge spanning the Red Sea, connecting the proposed city to Egypt and the rest of Africa. Some 25,900 square kilometers have been allocated for the development of the urban area that will stretch into Jordan and Egypt.

BLOOMBERG