) had a mandate to go big, and was ready to: it picked up a $3.5bn stake in Uber, placed $45bn in the world’s largest technology-investment fund, SoftBank’s Vision Fund, and provided half the capital for a $40bn infrastructure fund run by Blackstone, a private-equity giant. It has since bought stakes in everything from Heathrow Airport and Nintendo to Hollywood studios and French hotels.
Many of these sources will come under pressure. Not only is the fund expected to keep spending more, but as demand for oil slows the Saudi government will become less munificent. By 2030 millions more Saudis will have entered the workforce. The state employs many locals on higher wages than the private sector, with salaries counting for 40% of its total spending, meaning this will strain its budget. Bosses at domestic firms, many part-owned by the, now talk of cost-cutting.
Moreover, private-equity-style valuation methods, which depend on past performance and projections of future cash flows, are tough to apply to many of the companies and projects in which the, for instance, is expected to cost around $500bn. But how and when it will begin to offer consistent cash flow is up for debate, making the investment more akin to a venture-capital one.
The final challenge is attracting foreign investment into Saudi Arabia. As the fund grows bigger, foreign money would assist its ambitions. It would also enable domestic firms to expand their horizons and access new markets, thereby reducing the chances of ending up in competition with one another. And it would allow the-approved data revision, Saudi Arabia attracted just 53bn riyals in foreign direct investment in the first three quarters, an amount equivalent to 2% of.