Saudi Arabia’s PIF will own 93% of EA after proposed buyout, with the rest of the consortium taking a much smaller share
It’s reportedly considered “unusual” for a sovereign wealth fund to take such a percentage
Further details of the proposed acquisition of Electronic Arts have been released, revealing that Saudi Arabia will own the lion’s share of the company.
When EA confirmed in September that it was to be acquired by a group of private investors, the exact breakdown of how much each investor would own wasn’t confirmed.
It was simply confirmed that the company would be acquired by “an investor consortium comprised of PIF, Silver Lake, and Affinity Partners”, in a transaction valued at $55 billion.
Now, as reported by the Wall Street Journal, a new filing has been listed which shows that the PIF – Saudi Arabia’s Public Investment Fund – will own 93.4% of the company should the acquisition be approved.
Silver Lake Partners – an investment fund run by a US global private equity film based in Silicon Valley – will own 5.5% of the shares, according to the filing.
Affinity Partners – an American investment firm formed by Donald Trump’s son-in-law Jared Kushner, which mainly focuses on investing in US and Israeli companies, with most of its funding coming from the Saudi Arabian government – will own the remaining 1.1%.
As a result of this, the funding of the deal will almost entirely have to be covered by the PIF, with the Wall Street Journal estimating it will have to put up around $29 billion to reflect its final ownership stake.
The publication notes that it’s “unusual” for sovereign wealth funds to own such a majority when they’re part of a consortium. Usually private equity firms have a larger investment – because they’re more experienced in making deals and running businesses – while sovereign wealth funds “typically ride on the coattails” as minority investors.
The deal, which is set to be the largest ever leveraged buyout if it’s approved by shareholders, is being described as a large financial bet for Saudi Arabia at a time when is finances are starting to become strained.
As the Wall Street Journal explains, the PIF may be a $1 trillion fund but it’s been stretched by a number of commitments including a number of extremely expensive ‘megaprojects’ such as a new future-city called Neom and numerous new stadiums for the 2034 FIFA World Cup.
Last month the New York Times reported that the PIF could be set to close its wallet to new investments for the time being, due to several projects that are in financial distress, according to 11 people briefed on its operations.
Those projects include the aforementioned 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.
In recent years Saudi Arabia officials have said its investments in the games industry will help to modernize the kingdom, but they have come with negative fallout due to the country’s highly criticised human rights abuses.
Notably, the crown prince has been accused by US Intelligence of ordering the brutal murder of journalist Jamal Khashoggi. The country has also has historically cracked down on female activists and LBGTQI+ rights, with legal repercussions for LGBTQI+ individuals including imprisonment, fines or the death penalty according to Amnesty International.
