Standard Life said in talks with Saudis over seeding local funds

The new funds would focus on bringing much needed foreign real estate and infrastructure investment into the kingdom
Standard Life said in talks with Saudis over seeding local funds
The sovereign fund last year agreed to commit $20 billion to an infrastructure fund with Blackstone Group LP, the world’s largest private equity manager.
By Bloomberg
Mon 08 Oct 2018 07:50 AM

Standard Life Aberdeen Plc is in talks with Saudi Arabia about starting one or more investment vehicles that would be seeded by the kingdom’s sovereign wealth fund and could raise billions of dollars, according to people familiar with the matter.

Under the proposal, Standard Life Aberdeen would manage the funds, which would be topped-up by money from other investors, the people said, asking not to be identified as the information is private. Standard Life Aberdeen is studying opening an office in Riyadh to manage the new funds from there, the people said.

The talks are at an early stage and could fall apart, the people said. Officials for Standard Life Aberdeen declined to comment.

“The Public Investment Fund regularly explores potential investment partnerships, regarding opportunities in Saudi Arabia and to support wider portfolio diversification efforts, but does not comment on specific discussions,” said a spokesman for the Saudi wealth fund, known as PIF.

Saudi Arabia has made the sovereign fund a key element of an economic transformation plan that seeks to reduce the kingdom’s dependence on oil and turn it into a financial powerhouse.

The new funds would focus on bringing much needed foreign real estate and infrastructure investment into the kingdom, the people said. For the Scottish asset manager, a seed investment from the Saudis would be a welcome win as it seeks to reverse client outflows.

It wasn’t clear how much the PIF would invest initially. The sovereign fund last year agreed to commit $20 billion to an infrastructure fund with Blackstone Group LP, the world’s largest private equity manager. It also backed an almost $100 billion technology fund run by Japan’s SoftBank Group Corp.

Standard Life Aberdeen, by comparison, is a little smaller in alternative assets. It oversaw 27.2 billion pounds ($35.4 billion) in private markets and alternative assets at the end of June, including 3.5 billion pounds in infrastructure equity assets. It also had 28.9 billion pounds in real estate strategies at the end of the first half.

The sovereign fund has been accelerating investments and in recent months agreed to invest more than $1 billion in electric car startup Lucid and built a roughly $2 billion stake in Elon Musk’s Tesla Inc. It is in talks to sell its stake in chemical producer Saudi Basic Industries Corp. that could bring in about $70 billion. It also raised an $11 billion loan to help fund some of its investments.

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