PIF’s partnership with SoftBank an unprecedented success in tech investing

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Sovereign wealth funds the world over have grown more aggressive in unlocking the most promising investments that bring long-term returns and maximize their assets.

They’re building more strategic partnerships, and taking greater stakes in major corporate and knowledge-based enterprises showing promising signs of future growth prospects. They choose partners based on their risk appetite and hedge their domestic and international funds.

The Public Investment Fund (PIF), Saudi Arabia’s own sovereign wealth fund, is the Kingdom’s veritable engine of economic diversity.

Its achievements in the way of financial sustainability speak for themselves: PIF invested in some of the most innovative enterprises around the world, putting the Kingdom at the forefront of promising sectors and emerging industries, which is part and parcel of the country’s Vision 2030 objective of diversifying its economy.

PIF has been impressively successful in building its international networks, creating solid relationships with global investors, asset managers, investment banks, and global brokers to become one of the world’s largest investment powerhouses.

PIF channeled plenty of its global investments into many innovative fields and emerging industries all over the world, creating programs to invest in the United States’ infrastructure and the Russian Direct Investment Fund, as well as Lucid Motors, which builds electric vehicles, Uber, a household name in ride sharing, and many other strategic investments that have amplified its returns.

Of all PIF’s linkups, the one with Japan’s SoftBank Group is perhaps among its top partnerships.

An unmatched success by any measure, SoftBank earlier this year achieved its highest annual revenues ever, as well as record profits, thanks to investments channeled out of Vision Funds 1 and 2.

Shared vision

PIF and SoftBank had a shared vision of a world that’s witnessing nothing short of a revolution in artificial intelligence, one that will change every aspect of how we live. Seeing an opportunity to ride the unstoppable wave of innovation in AI, in 2016, PIF and SoftBank teamed up in what remains today an unprecedented partnership on technology investments.

The two sides created an investment vehicle with which they could strike up partnerships with the next generation of tech startups around the world that leverage AI and Big Data to holistically evolve and grow existing industries and create entirely new ones.

Additionally, the two sides joining forces fosters support for the Kingdom’s drive for economic diversity –- a key objective of Vision 2030 – as well as the transfer of knowledge, creating more local job opportunities, and providing direct access to cutting-edge technologies all over the world.

In alignment with the Kingdom’s ambitions for Vision 2030, the new investment vehicle was named the SoftBank Vision Fund.

By May of 2017, the then-new Vision Fund had achieved its first major success with the launch of the $98-billion Vision Fund 1, the largest tech fund in the history of investing.

Building up a series of Vision Funds

Over the course of four years, Vision Fund 1 invested as much as $86 billion in more than 90 tech or tech-related companies that pioneer new ways to reshape our future, how we live, how we work and how we play.

With numerous partnerships in the US, Europe, and Asia, SoftBank Group is one of the world’s leading investment conglomerates.

The Vision Fund has acquired shares in fast-growing companies that managed to maintain a strong global presence, such as Uber, Bytedance, Coupang, DoorDash, Grab, and Didi, which helped build up the Fund as the vehicle for the world’s largest tech ecosystem, run by a world-class operations team that helps these enterprises sustain their growth.

As the COVID-induced socioeconomic upheaval continues to reverberate throughout the world, and as nations continue to struggle with the preventive measures imposed to combat the spread of the pandemic, Vision Fund investors worked closely with their portfolio companies to ensure that they possess the necessary operational flexibility and financial cushion to pull through the challenge and reemerge back onto the path of growth in a world that’s still coming to terms with the pandemic’s long-term effects.

The acceleration of an emerging set of digital behaviors that were brought about by COVID lockdowns worldwide not only bore out the soundness of SoftBank Vision Fund’s strategy, but helped widen the pipeline of innovation, creating more investment opportunities in potentially transformative companies. Several of these had a profound impact on the permeation of digitized services throughout countless industries, with ‘e-this’ and ‘remote that’ becoming the new normal: e-commerce, remote learning, software, home entertainment, food delivery, and healthcare, to name just a few. The runaway growth in these and numerous other shifts only strengthened the performance of SoftBank Vision Fund 1, with many of the Fund’s portfolio companies rebounding to pre-COVID levels of performance.

As of June 30th, 2021, the Fund had seen no fewer than 19 public offerings, which inevitably caught the attention of many outside investors who flocked to buy stocks, often above the listing price. This helped dozens of companies to shore up their market and actual capital and, in turn, helped the Fund’s performance skyrocket: as of June 30, the Fund made $60.3 billion in profits, returning almost $27 billion to investors, including PIF.

Given the strategic importance of the Middle East to the SoftBank Vision Fund, the fund went all in with support for economic diversity in the region, opening an office in Riyadh to manage its operations in the Kingdom, enhancing the portfolio’s local presence to launch new products and services, enabling the transfer of knowledge, creating jobs, and bolstering entrepreneurship in target countries, and especially in the Saudi market, where opportunities for investors in almost every sector are nearly limitless.

Factoring in a growing majority of highly tech-literate young men and women with an acute sense of the Kingdom’s vast potential and invaluable investment opportunities, it was only natural that multiple ambitious plans were put in place to make a regional business hub out of the Kingdom and a global tech haven, with all of the initiatives to strengthen the Kingdom’s standing in many strategic sectors, such as AI.

SoftBank Vision Fund: Future in Tech

Through the past four years, SoftBank Vision Fund was able to recruit over 40 of its portfolio companies to the region in general and the Kingdom’s market in particular, a feat facilitated by the opening of its Riyadh office.

A lot of these companies are now up and running in full swing, serving local communities across the Middle East.

Despite the somewhat slower pace of recruitment recently, the Fund is still ticking off success after brilliant success, especially in the Saudi market.

Klook, a travel and leisure booking platform designed to connect travelers with experiences and attractions, recently announced a partnership with Seera Group, a holding company with a full portfolio of tourism products and services, and the Saudi Tourism Authority, to promote the Kingdom as a world-class destination.

Automation Anywhere, a global leader in Robotic Process Automation, is in talks with several local tech companies to form partnerships that would enable local partners to offer and apply Automation Anywhere’s solutions to local customers.

Saudi Aramco Ventures recently announced that it’s investing in Energy Vault, a Swiss-based, global energy storage company specializing in gravity and kinetic energy-based, long-duration energy storage products.

Tier, Cars24, and FirstCry have all announced that they are setting up local operations with local team selection already underway, and will be fully up and running by the end of the year.

SoftBank Vision Fund’s Riyadh team is now talking to more than 20 portfolio companies into setting up shop in the Kingdom.

The Fund plans to attract over 40 more of its portfolio companies to the Kingdom in the next 12 months, while SoftBank Investment Advisers is currently evaluating many possible investment opportunities in the Kingdom.

SoftBank Vision Fund 2 recently made its first investment in a Saudi-headquartered company, making a $125-million investment in Unifonic, a customer engagement platform that offers an integrated system of text, voice, email, and web messaging that enables companies to relate to customers through an omnichannel platform,.

SoftBank Vision Fund’s Riyadh office is in the advanced stages of talks with a number of pioneering Saudi tech companies to help them go global, with some exciting announcements are expected in the near future.

Challenges

Despite deploying capital for over four years, SoftBank Vision Fund is still early in its investment lifecycle .

The Fund continues to broaden relationships on multiple fronts that go beyond just securing returns on investments. SoftBank’s portfolio companies continue to innovate, grow and explore more opportunities, while SoftBank’s local team continues to build the Fund’s presence in the Kingdom, and invest in the local tech industry and help nurture national talent.

The partnership is expected to accomplish much more in the years to come.

Al Arabiya

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