As the Kingdom uses unexpected income from high oil prices to diversify its investments, the national wealth fund of Saudi Arabia has invested $7.5 billion in American blue-chip corporations ranging from Amazon.com Inc. to JPMorgan Chase & Co.
According to U.S. securities filings, the Public Investment Fund acquired minority shares in 17 businesses during the three months that ended June 30. These businesses included Microsoft Corp., BlackRock Inc., and Alphabet Inc., Google’s parent company. According to the documents, each investment was valued at $400 million to $500 million.
Despite the purchases, the $600 billion fund’s total holdings of U.S.-listed securities decreased by $3 billion to $40.8 billion in the quarter as other businesses in its portfolio were negatively impacted by this year’s share price decline.
On worries about escalating inflation and a recession, the S&P 500 index, which includes many of the fresh equities PIF bought, dropped 20% in the first half of this year. The index has now rebounded, but it is down 9% for the year as a whole.
Saudi Arabia is buying up American stocks as the country enjoys its best financial situation in years. Crown Prince Mohammed bin Salman, the chair of PIF and oversees the day-to-day operations of the Kingdom on behalf of his father, King Salman, is doubling down on an economic reform he first advocated in 2016 to wean the country off its reliance on oil.
Saudi Aramco, the nation’s oil firm, announced a 90% increase in quarterly net profits on Sunday, handing the government billions of dollars to spend and invest in the Kingdom.
Higher oil prices have aided Prince Mohammed in breaking out of his diplomatic exile after Western capitals ostracized him for years due to the death of journalist Jamal Khashoggi in 2018. President Biden, who has unsuccessfully urged Prince Mohammed to increase oil production to cut crude prices and combat inflation, was hosted by the prince in Saudi Arabia last month.
The Saudi government announced in June that it would not immediately spend this year’s surplus and has not yet given more funds to the national wealth fund to avoid the boom and bust of prior oil cycles. But PIF benefits directly from Aramco’s financial performance as a 4% stakeholder. The fund has recently invested around $3 billion in the Japanese video game developer Nintendo, $400 million in the car manufacturer Aston Martin, and $1.5 billion in regional businesses. Additionally, it has invested heavily in a project that is upending the professional golf sector this year.
$500m Saudi Investment in Russian oil
Regulatory papers revealed that between February and March, Saudi Arabia’s Kingdom Holding, the investment company run by billionaire Prince Alwaleed Bin Talal, covertly spent more than $500 million in three significant Russian energy companies.
By buying in Gazprom (GZPFY), Rosneft, and Lukoil, Kingdom was probably looking for discounted assets, but its move occurred as many Western governments put sanctions on Russian energy companies and their officials in response to Russia’s invasion of Ukraine on February 24.
Some Western state actors who have sought to isolate Russia over the invasion have been frustrated by Saudi Arabia and other Gulf states’ attempts to uphold what they claim is a neutral stance on the crisis in Ukraine.
In February, the Kingdom made investments in Gazprom and Rosneft global depository receipts valued at 1.37 billion riyals ($365 million) and 196 million riyals ($52 million), respectively.
As part of a comprehensive disclosure of recent transactions, documents on Sunday revealed that the company also invested 410 million riyals ($109 million) in Lukoil’s U.S. depository receipts between February and March. However, it did not justify any of its specific investments.
The investments made by Saudi Arabia’s national wealth fund, which is overseen by crown prince Mohammed Bin Salman, and owns 16.9% of Kingdom Holding, were previously kept a secret.
Read Also: Aramco: Saudi oil giant records $48bn profit
After placing a large winning wager on Citigroup (C) in the 1990s, Prince Alwaleed bin Talal gained international notoriety. He was also an early investor in Apple (AAPL).
The prince has also made hundreds of millions of dollars by investing in businesses like Uber (UBER) and Twitter (TWTR).
According to a person with knowledge of Kingdom’s company in June, Alwaleed’s investment strategy has centered on fresh alternatives that may be lucrative but involve risk, as well as looking at undervalued assets.
The Organization of the Petroleum Exporting Countries (OPEC) and associated producers joined forces to form the OPEC+ group, which Saudi Arabia and Russia lead.
