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- Sovereign wealth funds from Saudi Arabia and Abu Dhabi have been highly active over the past few years.
- These funds have significantly invested outside the Gulf region, with a notable interest in technology ventures.
- However, not all of these investments are progressing as hoped.
The Middle East’s prominent financial entities have made headlines recently with their aggressive investment strategies on a global scale.
Leaders at Saudi Arabia’s Public Investment Fund (PIF) and Abu Dhabi’s Mubadala, which collectively manage assets exceeding $1 trillion, have engaged in various investments outside their traditional territories to enhance their portfolios across diverse sectors.
A recent analysis by GlobalSWF published last month reveals that more than half of the approximately $96 billion allocated globally by state-backed funds during the first half of 2024 originated from Middle Eastern sources.
A significant focus for these well-capitalized institutions is on acquiring stakes and influence within technology markets. Economic diversification efforts driven by initiatives such as Vision 2030 in Saudi Arabia motivate fund managers to invest strategically with an eye toward future advancements.
Both sovereign wealth funds notably pledged a staggering $60 billion to SoftBank’s inaugural Vision Fund back in 2017—now recognized as one of the largest venture capital structures globally, generating substantial returns through investments in high-profile companies like TikTok parent ByteDance and Uber.
Lately, PIF and Mubadala are actively making tech investments themselves, directing billions toward sectors ranging from electric vehicles to innovative fintech enterprises looking to transform financial practices.
Despite enthusiasm for these new partnerships, results are mixed at best.
Shifting Strategies: The Case of Lucid
FETHI BELAID
This week marked another pivotal moment as PIF along with Mubadala confronted some stark realities regarding their ambitious tech objectives. Recently announced was a commitment by Saudi Arabia’s sovereign wealth fund to inject an additional $1.5 billion into Lucid—a California-based competitor to Tesla where it holds a controlling stake of around 60%. This influx is aimed at stabilizing operations amid challenging market conditions for luxury EV producers.
Lucid confirms that this funding involves Ayar—an affiliate tied closely with PIF—acquiring $750 million worth of convertible preferred stock alongside establishing another $750 million credit line during this critical juncture for growth.
Peter Rawlinson, CEO of Lucid Motors stated earlier this year that while they expect enough capital through next year despite ongoing expenditures nearing $1 billion quarterly focused on delivering high-end electric models—a confluence of factors including decreased consumer demand due largely to rising inflation rates has complicated matters considerably—their flagship model starts commands pricing around $69,900 tagged as able to reach sixty miles per hour within an astonishing 1.89 seconds!
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This newfound support from Saudi benefactors offers some respite; however Rawlinson emphasized already earlier this year it would be naïve assuming perpetual reliance upon what he referred cynically as ”inexhaustible riches.” It remains uncertain how deep or prolonged PIF’s involvement will extend moving forward amidst fluctuating performance metrics surrounding EV uptake trends over time!
Assisting Troubled Ventures: Magic Leap & More
< p >Similarly concerning “rescue” dynamics came into play regarding Magic Leap too.Investments disclosed earlier suggest further funding needed before mid-year deadlines looming soon after needing steady financial assistance momentum post investing considerable sums since initial ownership commenced two years prior.
