October 25, 2018

Khashoggi crisis may test Saudi PIF's expansion ambitions

Featuring Rachel Ziemba

Source: Reuters

Journalists Andrew Torchia, Saeed Azhar, Tom Arnold

A year ago the Saudi sovereign investor Public Investment Fund (PIF) was a rising star among state-backed funds.

It poured billions of dollars into the SoftBank technology fund of Japanese tycoon Masayoshi Son and the infrastructure vehicle of U.S. private equity firm Blackstone, and was building a war chest for overseas deals.

PIF, chaired by Crown Prince Mohammed bin Salman, emerged as the most viable partner for foreign investors after an anti-corruption purge last year tainted many members of the Saudi business elite.

But the outcry over the killing of journalist Jamal Khashoggi in the Saudi consulate in Istanbul this month has made some Western firms reluctant to deal with PIF, threatening to slow some of its grandiose projects and global investments.

“Firms in sectors with a stronger CSR (corporate social responsibility) profile, including U.S.-based tech, will have a harder time accepting PIF money,” said Steffen Hertog, a scholar on Saudi Arabia at the London School of Economics. “Larger and lumpier equity injections, potentially of the type giving the PIF a board seat, will be particularly difficult.”

Read the full article and more in Reuters.

  • Rachel Ziemba

    Adjunct Senior Fellow, Energy, Economics, & Security Program

    Rachel Ziemba is an Adjunct Senior Fellow at the Center for a New American Security (CNAS). Her research focuses on the interlinkages between economics, finance and security i...