Saudi Arabia is reportedly running low on cash for investments following EA deal
Several of the PIF’s investments are in financial distress; EA agreed $55bn deal to go private
Saudi Arabia’s Public Investment Fund (PIF) is reportedly running low on cash for new investments, due to some of its projects being in financial distress.
The Saudi PIF has made sweeping investments in recent years and is central to Crown Prince Mohammed bin Salman’s goal of making the Saudi economy less reliant on proceeds from oil.
That includes numerous investments in the video game industry, including stakes in game publishers like Take-Two and Nintendo, and a recent $55 billion deal to take control of Electronic Arts.
However, according to the New York Times, the PIF could be set to close its wallet for the time being, due to several projects that are in financial distress, according to 11 people briefed on its operations.
Those projects include Neom, a vast region and ski resort featuring robot workers, a coffee chain with one shop so far, a cruise line with one ship, and an electric vehicle start-up that has yet to deliver a car.
The kingdom still sits on deep oil wealth. Its ability to pump, however, is heavily constricted by geopolitical agreements to curtail supply and a low price for crude overall. The government is running a growing budget deficit and taking on debt to fulfil Prince Mohammed’s domestic promises.
According to the New York Times’ sources, the PIF is actively restructuring its operations and the prince has fired the head of at least one of its projects, Neom. It is also said to be drawing up plans to invest more in conventional areas like publicly traded stocks.
The largest investment by PIF recently was its bid for FIFA and Battlefield publisher, Electronic Arts. PIF’s representatives say it’s a long-term investment that will eventually double in value.
