With Massive Oil Windfall, Saudi Arabia Pours $7.5bn into US Stocks

A top member of the Organisation of Petroleum Exporting Countries (OPEC) Saudi Arabia, has through its Sovereign Wealth Fund (SWF) invested $7.5 billion in blue-chip American companies on the back of rising oil prices.

Some of the 17 companies in which the country has poured the massive excess funds and taken minority stakes, include Google parent Alphabet Inc., BlackRock Inc. and Microsoft Corp., in the three months ended June 30, according to U.S. securities filings. Each investment was worth $400 million to $500 million, the filings show.

The country also bought into Amazon, JPMorgan Chase & Co., among others.

The $620 billion Public Investment Fund also added to positions it held in Facebook Inc. owner Meta Platforms Inc., PayPal Holdings Inc. and Electronic Arts Inc. in the second quarter, according to a 13F filing.

The acquisitions show that the PIF, as the fund is known, is doubling down on its bet on technology investments despite a rout in valuations.

In contrast, Nigeria has not been able to take advantage of the rising international oil prices, due mainly to its over 700,000 barrels daily production deficit and its largely opaque fuel subsidy regime, estimated to cost N4 trillion this year.

A recent THISDAY report revealed the shocking depletion of what would have been a veritable buffer in this unusual time, with the Excess Crude Account (ECA), tumbling from $35.37 million in June to $376,655 in July.

While the ECA is the savings account for differentials in budgeted oil prices and the excess it is sold for, the Nigeria Sovereign Investment Authority (NSIA) is statutorily empowered to invest the funds in the interest of Nigerians.

But chaired by Crown Prince Mohammed bin Salman, the PIF is ploughing deeper into public markets as it pursues the goal of more than doubling its assets by 2025.

The wealth fund is boosting its investments in equities as Saudi Arabia’s income from oil almost doubled in the second quarter. Soaring crude prices are set to give the kingdom its first budget surplus in almost a decade.

The PIF’s most recent buying spree echoes the fund’s strategy in early 2020 when it spent billions snapping up stakes in US firms whose valuations had been battered by the onset of the coronavirus pandemic. It then sold many of those stakes when markets rebounded.

In total, the value of the PIF’s disclosed portfolio in the US fell by about $3 billion in the second quarter to roughly $40 billion, according to information from the filing that was compiled by Bloomberg.

Much of the drop was due to an $8.3 billion decline in the value of the PIF’s stake in electric car-maker Lucid Motors, which slumped after it cut production targets.

As well as buying about $482 million of shares in Starbucks Corp. and roughly $496 million in Costco Wholesale Corp., the PIF also pushed deeper into tech stocks, joining Abu Dhabi wealth fund Mubadala Investment Co. to become a go-to investor in the sector.

The PIF invested about $522 million in Datadog Inc. and roughly $2 billion in Electronic Arts Inc. during the second quarter, according to the filing.

Most of what’s known about the PIF’s holdings comes from regulatory filings. The fund itself discloses limited information publicly about its allocations to different geographies or asset classes.

It also invested in Zoom and Microsoft as part of a wider pick of US stocks, bringing the market value of the sovereign wealth fund’s investment portfolio to about $40.8 billion at the end of the second quarter.

The PIF acquired 213,000 class A shares in Alphabet, 4.7 million class A shares in Zoom and 1.8 million shares in Microsoft, a U.S. Securities and Exchange Commission filing showed.

Saudi Arabia added other stocks including Adobe Systems, Advanced Micro Devices , Salesforce, Home Depot , Freeport-McMoRan, Datadog and NextEra Energy.

The PIF, which manages $620 billion in assets, is at the centre of Saudi Arabia’s plans to transform the economy by creating new sectors and diversifying revenues away from oil.

The PIF is pursuing a two-pronged strategy, building an international portfolio of investments while also investing locally in projects that will help to reduce Saudi Arabia’s reliance on oil.

Emmanuel Addeh

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