In the coronavirus pandemic’s financial fallout, Saudi Arabia’s $300 billion sovereign-wealth fund has emerged as one of the world’s biggest bargain hunters, taking minority stakes worth billions of dollars in American corporations. Saudi Arabia’s Public Investment Fund (PIF) in the first quarter of 2020 bought shares valued at about half a billion dollars each in Facebook, Walt Disney, Marriott International, and Cisco Systems. The fund bought financial stocks, investing $522 million in Citigroup, and $488 million in Bank of America while also spending $714 million on a stake in Boeing…Crown Prince Mohammed bin Salman, the kingdom’s day-to-day ruler, tasked the sovereign-wealth fund in 2015 with diversifying the country’s economy away from oil by investing in companies and industries untethered to hydrocarbons.
PIF’s recent buying spree highlights a bold strategy of piling into global stocks even as the novel coronavirus and a crash in oil prices mean that Saudi Arabia’s financial position is now the most precarious in a decade. The Saudi government in May 2020 tripled its value-added tax rate and cut subsidies to state employees as it contends with lower oil revenue and an economy weakening under coronavirus lockdown.
Many of the stocks that PIF has targeted are trading at historic lows, bruised by the fallout from the coronavirus and rock-bottom oil prices that have battered stocks of energy companies in 2020. Teh PIF bought in 2020 undisclosed stakes in a bevy of energy companies, including Equinor (Norway), Royal Dutch Shell, Total (France) and Eni (France). The PIF invested $484 million in Shell, $222 million in Total and previously unreported stakes of $828 million in BP $481 million in Suncor Energy and $408 million in Canadian Natural Resources.
It also purchased shares valued at roughly $80 million each in: Warren Buffett’s Berkshire Hathaway; chipmakers Broadcom and Qualcom ; IBM; drugmaker Pfizer; Starbucks; railroad company Union Pacific; outsourcer Automatic Data Processing; and Booking.com….On top of the stakes in public companies, PIF is also awaiting regulatory approval for a roughly £300 million ($363 million) buyout of U.K. Premier League soccer team Newcastle United.
Excerpts from Rory Jones and Summer Said, Saudi Sovereign-Wealth Fund Buys Stakes in Facebook, Boeing, Cisco Systems, WSJ, May 18, 2020