Cairo-Saudi Arabia and Japan’s SoftBank Group have joined efforts together and announced establishing a technology investment fund that could grow as large as a whopping $100 billion.
The fund will be one of the world’s largest private equity investors and a potential kingpin in the industry.
The move is part of a series of dramatic business initiatives launched by Riyadh this year- most initiatives kicked off by the Kingdom’s Vision 2030 focus on diversifying national income sources.
Saudi Arabia’s market is forecasted to expand into several domains that will aid in infrastructure and development projects.
Earlier this year, it invested $3.5 billion in U.S. ride-hailing firm Uber, surprising many.
SoftBank, a $68 billion telecommunications and tech investment behemoth, has also been stepping up investment in new areas. It agreed to buy UK chip design firm Arm Holdings in July in Japan’s largest ever outbound deal.
Saudi Arabia’s top sovereign wealth fund, the Public Investment Fund (PIF), will be the lead investment partner and may invest up to $45 billion over the next five years while SoftBank expects to invest at least $25 billion.
Several other large, unnamed investors are in active talks on their participation and could bring the total size of the new fund up to $100 billion, SoftBank said.
“Over the next decade, the SoftBank Vision Fund will be the biggest investor in the technology sector,” SoftBank Chairman Masayoshi Son said in a statement.
At an annual rate of $20 billion, the new London-based fund could at current levels account for roughly a fifth of global venture capital investment.
In the year to September, venture capital-backed companies globally raised $79 billion, according to data from KPMG and CB Insights, with tech start-ups attracting the lion’s share of that cash.
“Son is very good at looking for companies with big growth prospects, and that will create fierce competition,” said Hiroyuki Kuroda, secretary general of the Venture Enterprise Center in Japan.
The project will be led for SoftBank by Rajeev Misra, the group’s head of strategic finance and who joined the Japanese firm in 2014 from Fortress Investment Group, a private equity and hedge fund group. PIF will engage its own team.