Saudi Arabia’s sovereign wealth fund is pursuing investments in an industry long favoured by Crown Prince Mohammed bin Salman – video games.
The Riyadh-based Public Investment Fund has acquired more than $3 billion worth of stock in three US video-game makers during the fourth quarter, according to a regulatory filing.
They include Activision Blizzard, Electronic Arts and Take-Two Interactive Software.
The sovereign wealth fund, also known as PIF, is chaired by Prince Mohammed, who told Bloomberg Businessweek in 2016 that he was part of the first Saudi generation to grow up playing video games.
The crown prince, pictured below, credited video games with sparking ingenuity in the Bloomberg Businessweek profile, while telling the New Yorker in 2018 that his favourite diversion is Call of Duty series, Activision’s best-selling franchise.
In November, a subsidiary of the crown prince’s charitable organisation – the Mohamed bin Salman Foundation – said it purchased a one-third stake in SNK Corp, the Japanese developer of King of Fighters and Samurai Shodown.
The charity, also known as the MiSK Foundation, said it would increase its stake to 51 percent in the future.
The sovereign wealth fund acquired 14.9 million Activision shares with a market value of almost $1.4 billion during the fourth quarter, according to a Form 13F filed with the US Securities and Exchange Commission. Its other purchases included 7.4 million Electronic Arts shares and 3.9 million Take-Two shares worth about $1.1 billion and $826 million, respectively, at the end of December.
The PIF is a key part of the crown prince’s plan to diversify the Saudi economy from its dependence on oil. The fund has made several high-profile investments in recent years, including a $4.4 billion stake in Uber Technologies and big commitments to Softbank Group Corp’s Vision Fund.
The big bets on gaming were the latest sign of how the crown prince and Yasir Al Rumayyan, the governor of the sovereign fund, are leading an aggressive shift in how the kingdom invests its wealth.
In the past, excess oil revenue was invested by the Saudi central bank, mostly in stable liquid assets like US Treasuries. The kingdom missed an opportunity to buy cheap stocks during the 2008 global financial crisis, Al Rumayyan, pictured below, said in December.
But it was ready to take advantage of a slump in markets early last year as the coronavirus pandemic sent equities into a tailspin.
The PIF received a $40 billion transfer from the nation’s reserves in March to fund a flurry of activity that saw the fund buy stakes in companies including Citigroup, Facebook and cruise-ship operator Carnival Corp. By the end of June it had sold most of those stakes.
As the kingdom was boosting its exposure to US equities held by the PIF in the last few months of 2020, its holdings of US Treasures fell the most since April.
The total value of the PIF’s 13F holdings reached almost $12.8 billion as of Dec 31, up from $7.1 billion as of September 30. That was also boosted by a $1 billion gain in the value of the PIF’s Uber stake.
By contrast, its exposure to US equities in the third quarter fell by $3 billion, mainly because the PIF sold stakes in exchange-traded funds that track the real estate and materials sectors.
The fund’s foreign holdings as a portion of total assets are expected to fall over the next few years as it commits to spending at least $40 billion a year at home.
The sovereign investor’s role will increasingly be to develop huge new projects around the country focused on building up new industries and diversifying the economy.
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