Image Source: Bloomberg
According to regulatory records, Prince Alwaleed Bin Talal, the billionaire investor who controls Kingdom Holding in Saudi Arabia, secretly spent more than $500 million on three significant Russian energy companies during February and March.
Kingdom presumably sought undervalued assets by investing in Gazprom (GZPFY), Rosneft, and Lukoil, but its decision was made as many Western governments placed sanctions on Russian energy companies and their officials in the wake of Russia’s invasion of Ukraine on February 24.
Some Western leaders who have sought to isolate Russia over the invasion have expressed frustration with Saudi Arabia and other Gulf states’ attempts to uphold what they claim is a neutral stance on the crisis in Ukraine.
In February, Kingdom made investments in Gazprom and Rosneft global depository receipts totaling 1.37 billion riyals ($365 million) and 196 million riyals ($52 million), respectively.
A detailed report of recent investments included the firm’s investment of 410 million riyals ($109 million) in Lukoil’s U.S. depository receipts between February and March, according to documents released on Sunday. However, for any of its specific investments, it provided no justification.
The investments made by Kingdom Holding, a company owned by Saudi Arabia’s sovereign wealth fund headed by crown prince Mohammed Bin Salman, were previously kept a secret.
After placing a significant winning wager on Citigroup (C) in the 1990s, Prince Alwaleed bin Talal gained international notoriety. He was also an early investor in Apple.
By investing in businesses like Uber (UBER) and Twitter, the prince has also profited hundreds of millions of dollars (TWTR).
A source with knowledge of the Kingdom’s business claimed in June that Alwaleed’s investment strategy has been concentrated on new opportunities that may be lucrative but involve risk, as well as looking at undervalued assets.
The Organization of the Petroleum Exporting Countries (OPEC) and allied producers formed an alliance in 2017 known as OPEC+, with Saudi Arabia and Russia serving as its leaders.
Saudi Arabia Invests 7.5 Billion Dollars in American Stocks
As the Kingdom uses unexpected income from high oil prices to diversify its investments, the sovereign 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 stakes in 17 businesses, including Microsoft Corp., BlackRock Inc., and Alphabet Inc., Google’s parent company. According to the filings, each investment was worth between $400 million and $500 million.
Read Also: Saudi oil giant Aramco records $48bn quarterly profit
Despite the purchases, the $600 billion fund’s overall holdings in U.S.-listed securities decreased by $3 billion to $40.8 billion in the quarter as other companies in its portfolio were negatively impacted by this year’s share price decline.
Fears of a recession and increasing inflation caused the S&P 500 index, which includes many of the new equities PIF bought, to decline 20% in the first half of this year. The index has now bounced back but is still down 9% for the year.
As the country enjoys its best financial situation in years, Saudi Arabia is buying up American stocks. Crown Prince Mohammed bin Salman, who chairs PIF and oversees the day-to-day operations of the Kingdom on behalf of his father, King Salman, is doubling down on the 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, giving 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 shunned him due to the death of journalist Jamal Khashoggi in 2018. President Biden, who has unsuccessfully urged Prince Mohammed to increase oil production in order to reduce crude prices and combat inflation, was hosted by the prince in Saudi Arabia last month.
The Saudi government announced in June that it wouldn’t immediately spend this year’s surplus and hasn’t yet given extra money to the national wealth fund in order to avoid the boom and bust of prior oil cycles. However, 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 company 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 industry this year.
