- PIF said to have held talks with local, international banks
- Investment in Uber marks biggest overseas deal yet for PIF
Saudi Arabia’s sovereign wealth fund is weighing a loan of as much as $3 billion for its investment in Uber Technologies Inc., people with knowledge of the matter said.
The Public Investment Fund has held preliminary talks with local and international banks about borrowing between $2 billion and $3 billion, the people said, asking not to be identified as the plans are private. Talks are at an early stage and the PIF, as the Saudi fund is known, hasn’t yet decided whether to proceed with the loan, the people said.
The PIF is investing $3.5 billion in the ride-sharing service in its highest-profile overseas investment yet. The deal, announced on Wednesday, gives Managing Director Yasir Alrumayyan a board seat at the San Francisco-based company and also marks the biggest investment ever in Uber. The fund aims to boost its share of holdings abroad to about half by 2020, from five percent now. JPMorgan Chase & Co. advised the PIF on the Uber investment.
A spokesman for the PIF declined to comment.
As part of a transformation program to wean its economy off oil, Saudi Arabia is planning to transfer ownership of state oil company Saudi Aramco to the PIF and create a sovereign wealth fund with assets of more than $2 trillion. In July last year, the fund made one if its first investments outside the kingdom when it took a 38 percent stake in Korea’s Posco Engineering & Construction Co. for $1.1 billion. It has also announced plans to invest in Russia and Jordan.
It is not uncommon for sovereign wealth funds in the Middle East to borrow from banks and capital markets to fund their investments. Abu Dhabi’s Mubadala Development Co. raised a $1.75 billion loan and issued a $500 million bond last month. Qatari Diar Real Estate Development Co., a unit of Qatar’s sovereign wealth fund, borrowed $2.5 billion from banks to fund its purchase of London’s Chelsea Barracks in 2008.
The PIF could receive $106 billion in cash from the sale to the public of a 5 percent stake in Saudi Aramco, the Sovereign Wealth Fund Institute said in April. Transferring Aramco to the PIF would technically make investments the source of government revenue, not oil, according to Deputy Crown Prince Mohammed bin Salman.
The deputy Crown Prince has expressed huge ambitions for the PIF, which he expects to have a global influence. “There will be no investment, movement or development in any region of the world without the vote of the Saudi sovereign fund," he said in an interview with the country’s Al Arabiya television channel.