Image Source: Bloomberg
Over $500 million was secretly invested in three significant Russian energy companies between February and March by Kingdom Holding, the investment company run by Saudi Arabia’s billionaire Prince Alwaleed Bin Talal.
By investing in Gazprom (GZPFY), Rosneft, and Lukoil, Kingdom was likely looking for discounted assets, but its decision was made as many Western countries put sanctions on Russian energy companies and their officials in the wake of Russia’s invasion of Ukraine on February 24.
Saudi Arabia and other Gulf nations have so far made an effort to maintain what they call a neutral stance on the conflict in Ukraine, which has angered some Western politicians who have pushed to isolate Russia over the invasion.
Saudi Arabia invested in global depository receipts of Gazprom and Rosneft in February for a total of 1.37 billion riyals ($365 million) and 196 million riyals ($52 million), respectively.
According to documents made on Sunday as part of a thorough disclosure of recent investments, the company also invested 410 million riyals ($109 million) in Lukoil’s U.S. depository receipts in February and March. However, the company explained none of the precise investments it made.
The investments made by Kingdom Holding, which is 16.9% held by Crown Prince Mohammed Bin Salman’s sovereign wealth fund for Saudi Arabia, were previously kept a secret.
Prince Alwaleed bin Talal gained international notoriety for placing a significant winning wager on Citigroup (C) in the 1990s. He was also an early Apple investor (AAPL).
Aside from that, the prince has made hundreds of millions of dollars by investing in businesses like Uber and Twitter (TWTR).
In June, a person with knowledge of the Kingdom’s operations claimed that Alwaleed’s investing strategy has been centered on fresh chances that may be lucrative but involve risk and looking at undervalued assets.
The Organization of the Petroleum Exporting Countries (OPEC) and allied producers founded the OPEC+ group in 2017, and Saudi Arabia and Russia are the organization’s leaders.
$7.4 bn invested in American stocks by Saudi Arabia
Saudi Arabia’s sovereign wealth fund has put $7.5 billion into American blue-chip corporations like Amazon.com Inc. and JPMorgan Chase & Co. as the country uses extra money from high oil prices to diversify its assets.
According to U.S. securities filings for the three months ending June 30, the Public Investment Fund acquired minority shares in 17 different companies, including Microsoft Corp., BlackRock Inc., and Alphabet Inc., Google’s parent company. The records demonstrate that each investment was worth between $400 million and $500 million.
Despite the purchases, the $600 billion fund’s overall holdings of U.S.-listed securities decreased by $3 billion to $40.8 billion in the quarter as other businesses in its portfolio suffered losses due to this year’s share price decline.
In the first half of this year, on worries about escalating inflation and a recession, the S&P 500 index, which includes many of the new stocks PIF bought, dropped 20%. Although it has now bounced back, the index is still down 9% for the year.
With its healthiest financial situation in years, Saudi Arabia is buying up American stocks. In order to capitalize on the windfall from this year’s high oil prices, Crown Prince Mohammed bin Salman, who chairs PIF and oversees the Kingdom’s day-to-day operations for his father, King Salman, is expanding on the economic reforms he first suggested in 2016 to wean the country’s economy off of its reliance on oil.
The government has received billions of dollars to spend and invest in the Kingdom after Saudi Aramco, the nation’s oil firm announced a 90% increase in quarterly net profits on Sunday.
Since Jamal Khashoggi’s murder in 2018, Prince Mohammed has been shunned by Western capitals; higher oil prices have helped him break out of these diplomatic shackles. President Biden, who has urged Prince Mohammed to increase oil production 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 would delay using this year’s surplus in order to avoid the boom and bust of prior oil cycles. It has also failed to provide the sovereign wealth fund with new funds. Though PIF benefits directly from Aramco’s financial success as a 4% shareholder in the firm. In recent months, the firm has invested roughly $3 billion in the Japanese video game company Nintendo. It also oversaw a $400 million investment in the automobile manufacturer Aston Martin and bought holdings in local businesses with an estimated $1.5 billion in market value. Additionally, it has invested heavily in a project this year that is upending the professional golf sector.