Saudi wealth fund commits $20bn to US infrastructure as Trump slams Iran

22/05/2017

Trump in Saudi Arabia May 2017Ties between Washington and Riyadh moved up a notch this week during the course of US President Donald Trump’s visit to Saudi Arabia with the KSA’s Public Investment Fund (PIF) unveiling plans to invest $20bn with Blackstone, the New York based multinational private equity, alternative asset management and financial services company, becoming the anchor investor in a new $40bn infrastructure fund that will focus on upgrading US assets.
The announcement was welcomed by US President in a speech in which he also held Iran responsible for global extremism, and urged the international community to isolate the Islamic Republic. “This landmark agreement includes the announcement of a US$110bn Saudi-funded defence purchase,” he said. “And we will be sure to help our Saudi friends to get a good deal from our great American defence companies, the greatest anywhere in the world. This agreement will help the Saudi military to take a far greater role in security and operations having to do with security.”
Terms have yet to be agreed and both sides were at pains to emphasise that the agreement was the culmination of talks that predated the US president’s election.

Iranian Foreign Minister Mohammad Javad Zarif speaks to the media in Tbilisi, Georgia, April 18, 2017. REUTERS/David Mdzinarishvili

The announcement was one of several deals – including arms and other investments valued at between $280bn and $380bn – that were immediately condemned by Iran’s Foreign Minister Mohammad Javad Zarif.
“Iran – fresh from real elections – attacked by @POTUS [President of the US] in that bastion of democracy & moderation. Foreign Policy or simply milking KSA of $480bn?,” he tweeted.
Over the weekend the PIF also finalised plans to commit $45bn to a new $90bn technology investment fund to be managed by SoftBank, the Japanese tech-to-telecoms conglomerate led by Masayoshi Son, its billionaire founder.
This sudden burst of activity from the PIF is directly linked to KSA plans to sell off 5% of Saudi Aramco next year which is expected to see the fund become a depository for as much as $100bn, transforming it into one of the world’s most powerful sovereign wealth funds. 

Source: FT