SoftBank tipped for $25bn KSA investment in ‘unique’ deal

SoftBank plans to deploy up to $15 billion in the new high-tech city of NEOM. (Reuters)
Updated 16 November 2017
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SoftBank tipped for $25bn KSA investment in ‘unique’ deal

LONDON: SoftBank’s reported plan to invest $25 billion in Saudi Arabia would be a “unique” move, a Riyadh-based economist has said.
The Japanese group, which is headed by Masayoshi Son, plans to invest the funds in Saudi Arabia over the next three to four years, Bloomberg reported on Wednesday, citing people familiar with the matter.
SoftBank plans to deploy up to $15 billion in the new high-tech city of Neom, with its $100 billion Vision Fund planning an investment of as much as $10 billion in Saudi Electricity, Bloomberg reported.
John Sfakianakis, director of economic research at the Gulf Research Center in Riyadh, said the reported investment would be “unique” as KSA is a co-investor in the Vision Fund.
“Here we have some of the money that Saudi Arabia invested in Vision finding its way back to the donor country, helping the Kingdom to invest in key evolving technologies, and boosting the economy overall,” said Sfakianakis.
The move would be part and parcel of what SoftBank indicated at last month’s Future Investment Initiative in Riyadh, added Sfakianakis.
SoftBank representatives made it clear then that they wanted to reinvest money from the Vision Fund into KSA, as the country looks to diversify its economy and reduce its dependence on oil, he said.
At the same time, the Vision Fund’s investment philosophy underlines Son’s belief in a future that he believes will be dominated by robotics and artificial intelligence.
Its investments so far have spanned robotics software start-ups like Brain Corp. and business software maker Slack. SoftBank has also been involved in a plan to buy a fifth of the existing stock of Uber — the company that has disrupted the transportation industry. With plans for Neom to be at the forefront of robotics and AI, the planned $500 billion megacity is an an obvious target for Son and SoftBank, said Sfakianakis.
Besides SoftBank and the Saudi wealth fund, investors in the Vision Fund include the sovereign wealth fund of Abu Dhabi, Apple and Foxconn. The Vision Fund announced in May it had raised over $93 billion from investors to fund ventures in areas such as AI and robotics.
Saudi Arabia previously announced plans to sell a large minority stake in Saudi Electricity to the Vision Fund but the figures have not been made public.
SoftBank did not respond to a request for comment on the Bloomberg report. Representatives of Saudi Arabia’s Public Investment Fund (PIF), the investor in the Vision Fund, did not provide a comment.


Oil-rich South Sudan seeks investment in fragile new peace

Updated 4 min 44 sec ago
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Oil-rich South Sudan seeks investment in fragile new peace

  • The country is eager to make up for $4 billion in lost revenue caused by the five-year conflict
  • The government is offering prospective investors incentives such as a tax-free grace period of up to 10 years

JUBA, South Sudan: South Sudan is making its first big foreign investment pitch since declaring an end to civil war, but the oil-rich nation faces hesitation from some companies that want to make sure the fragile new peace deal holds.
The country is eager to make up for $4 billion in lost revenue caused by the five-year conflict after the government and armed opposition signed a power-sharing agreement two months ago.
Tapping 3.5 billion barrels of oil reserves, the third largest in Africa, is the fastest route for South Sudan, whose economy is almost entirely dependent on oil exports.
“Do business or get out,” South Sudan’s petroleum minister, Ezekiel Lol Gatkuoth, said in an interview with The Associated Press on Wednesday.
More than 400 international and local companies are attending this week’s Africa Oil & Power Conference in the capital, Juba, up from the 300 that attended the initial conference last year.
The government is offering prospective investors incentives such as a tax-free grace period of up to 10 years. It hopes to build on the momentum created in August when drilling resumed in key oil fields for the first time since 2013. The aim is to return to the pre-conflict production of 350,000 barrels per day.
Some at the investment conference expressed cautious optimism after preliminary signs of growth.
Earlier this year Russian oil company Zarubezhneft signed a memorandum of understanding with South Sudan’s oil ministry to explore the 10 oil blocks that remain open. The government is also speaking with Russia’s third largest oil producer, Gazprom Neft, and Rosneft.
Those already licensed to operate in the newly reopened oil fields in Unity State are China National Petroleum Corporation, India-based Oil and Natural Gas Corporation and Malaysia-based Petronas.
And early next year local oil marketing company Trinity Energy will begin building East Africa’s only oil refinery, a $350 million project that will take about 18 months to complete. It will be able to produce 25,000 barrels per day. Currently South Sudan exports its crude oil, only to buy it back.
“South Sudan is a fantastic blank canvas ... because we see that the demand is here,” said Pearl Uzokwe, director of governance and sustainability at the Sahara Group, a Nigerian energy and infrastructure company that recently signed a memorandum of understanding with the government.
However, she said, it’s important for South Sudan’s government to create an enabling environment.
Past peace deals, as well as power-sharing arrangements between President Salva Kiir and armed opposition leader Riek Machar, have collapsed amid fresh fighting.
One analyst said most of his clients, especially Western ones, are taking a “wait and see” approach even as the mood seems positive.
“They’re not willing to commit to anything right now,” Shawn Robert Duthie, senior analyst for Africa Risk Consulting, told the AP. Many are worried about their reputational risk, he said. South Sudan’s oil sector has faced scrutiny for allegedly using oil revenues to fuel the civil war.
If the new peace deal can last a year without any huge flare-ups and if Kiir and his returning deputy Machar can work together it might help in bringing more people to the table, Duthie said.