Saudi Arabia looks to diversify using financial reserves

SEOUL, South Korea - Nov. 2, 2016 - PRLog -- The fund could become the world's biggest private equity investor, and comes amid a string of high profile business initiatives by Riyadh in 2016 as the oil rich nation looks to diversify away from the crude industry, a sector hit by low prices recently.

As such, the Kingdom is busy deploying its massive cash reserves, surprising many experts in February by investing nearly $4 billion in Uber, the U.S. ride-hailing company.

Saudi Arabia's potential partners in the fund, Japan's SoftBank, have also been actively stepping up their investments. The tech and telecoms giant bought out Arm Holdings, a British chip design company, a few months ago in a deal that only just got through the UK regulatory commission and ended up being Japan's biggest ever foreign investment.

The lead investor in the plan will be the Kingdom's top sovereign wealth fund, the Public Investment Fund (PIF), and analysts expect a $50 billion contribution with SoftBank saying they expect to put around $30 billion towards the fund.

Smaller, as yet unnamed, investment firms in Saudi Arabia are in discussions over providing smaller amounts, which will bring the fund up to an estimated $100 billion.

"The vision is that SoftBank and its investors will have control over the largest single fund in the tech industry within the next ten years," said William Harper, Head of Global Mergers and Acquisitions at CTI China Renaissance, in a Reuters interview. "If the fund grows at the expected $20 billion per year then it will account for around 20% of the world's venture capital before the next decade."

Tech startups have been all the rage this year, and firms backed by venture capital have raised funds in the region of $80 billion so far in 2016, according to reports by KPMG and CB Insights.

Masayoshi Son, the enigmatic leader of SoftBank, has been actively looking for opportunities with large, long-term growth prospects and is looking to keep financial reserves outside of his home country by creating the new London-based fund.