Saudi Arabian fund invests more than $1bn in Lucid Motors

Saudi Arabia’s Public Investment Fund is investing in California-based Lucid Motors. (Reuters)
Updated 17 September 2018
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Saudi Arabian fund invests more than $1bn in Lucid Motors

  • Deal will provide funding to enable the commercial launch of Lucid’s first electric vehicle – the Lucid Air

DUBAI: Saudi Arabia’s Public Investment Fund (PIF) said on Monday it had agreed to invest more than $1 billion in Lucid Motors to produce electric vehicles.
The deal will provide funding to enable the commercial launch of Lucid’s first electric vehicle, the Lucid Air, in 2020.

The investment comes a few weeks after Tesla Inc. CEO Elon Musk said the Saudi sovereign wealth fund could help him fund a $72 billion deal to take his electric carmaker private, although bankers have cast doubt on it making a big investment.
Tesla’s shares fell 2.2 percent on news of PIF’s investment in Lucid.
The deal supports Saudi efforts to build an environmentally friendly economy, a goal outlined in its Vision 2030 plan to diversify the kingdom away from a reliance on oil.
“By investing in the rapidly expanding electric vehicle market, PIF is gaining exposure to long-term growth opportunities, supporting innovation and technological development and driving revenue and sectoral diversification for the Kingdom of Saudi Arabia,” a spokesperson for PIF said.
PIF has an interest in electric cars and earlier this year built a stake of just under 5 percent in Tesla by snapping up shares in the open market, rather than acquiring newly issued shares.
A PIF spokesperson declined to say whether it had invested in Tesla.
Obtaining cheap capital is a constant challenge for carmakers, which can spend $1 billion or more engineering a single new model.
Based in Newark, California, Lucid Motors was founded in 2007 as Atieva by Bernard Tse, a former Tesla vice president and board member, and Sam Weng, a former executive at Oracle Corp. and Redback Networks.
The funding, which will be made through a special-purpose vehicle wholly owned by PIF, will be used by Lucid to complete development and testing of the Lucid Air, construct a factory in Arizona and start up production of the car.
“The convergence of new technologies is reshaping the automobile, but the benefits have yet to be truly realized,” said Peter Rawlinson, chief technology officer of Lucid. “This is inhibiting the pace at which sustainable mobility and energy are adopted. At Lucid, we will demonstrate the full potential of the electric connected vehicle in order to push the industry forward.”
PIF has already made substantial commitments to other environmentally friendly projects, including renewables and recycling, and to technology companies or investments, including a $45 billion agreement to invest in a giant technology fund led by Japan’s SoftBank Group Corp.


Saudi Real Estate Refinance Co. plans up to $1.07bn sukuk sale this year

Updated 23 April 2019
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Saudi Real Estate Refinance Co. plans up to $1.07bn sukuk sale this year

  • The plan by SRC, a subsidiary of Saudi Arabia’s sovereign Public Investment Fund, comes as it prepares to purchase more home loan portfolios
  • SRC, formed in 2017, is also keen to tap foreign institutional investors for its debt sale this year

RIYADH: Saudi Real Estate Refinance Co. (SRC), modelled on US mortgage finance firm Fannie Mae, aims to issue up to 4 billion riyals ($1.07 billion) of long-term sukuk this year, its chief executive said on Tuesday.

The plan by SRC, a subsidiary of Saudi Arabia’s sovereign Public Investment Fund, comes as it prepares to purchase more home loan portfolios from mortgage financing companies and banks to boost the Kingdom’s secondary mortgage market.

SRC, formed in 2017, is also keen to tap foreign institutional investors for its debt sale this year, Fabrice Susini told Reuters in an interview.

“Our strategy is clearly to tap the market twice this year,” he said. “We are really looking at probably issuing something between ... 2 and 4 billion riyal that we may be issuing in two tranches.

He said SRC was looking at sukuk in the 10 to 15-year range, to help minimize refinancing risks. “Generally speaking we are trying to issue as long as possible,” Susini said.

He said the company was assessing whether it could also issue bonds in currencies other than the local riyal.

In March, SRC completed a 750 million riyal sukuk issue with multiple tenors, under a program that allows it to issue up to 11 billion riyals of local currency denominated Islamic bonds.

“The rule of the game for us is, like many projects across the Kingdom, attract liquidity from foreign investors,” Susini said.

He said SRC had spent 1.2 billion riyals from its balance sheet buying mortgages from local mortgage financing companies and provided liquidity to these firms.

It has also signed initial accords with several commercial banks to acquire housing mortgage portfolios.

Saudi Arabia’s housing ministry is targeting the mortgage market to reach a total value of 502 billion riyals by 2020 from around 300 billion riyals now.

The government wants to increase activity in the real estate market as it moves to revitalize the economy and is taking steps to reform the sector as part of its 2030 reform plan.

It has been working with developers and local banks to counter a shortage of affordable housing — one of the country’s biggest social and economic problems. Saudi Arabia wants 60 percent of its nationals to own homes by 2020, up from 47 percent in 2016.

The size of real estate financing relative to its gross domestic product is 5 percent in Saudi Arabia compared to 69 percent in the United States, 74 percent in the United Kingdom and 43 pct in Canada, the housing ministry has said.

“The goal of SRC in this market was to make sure that we will be able to refinance at least around 10 percent of the market in 2020, and 20 percent of the market by 2028,” Susini told Reuters.