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Saudi’s Uber and Tesla Investor Thrust Into Crisis - The Information

Discussion in 'News' started by jocker12, Nov 5, 2018.

  1. jocker12

    jocker12

    Location:
    Washington
    The murder of Washington Post columnist Jamal Khashoggi in Saudi Arabia's consulate in Turkey has sparked soul-searching among U.S. tech companies that have accepted investment money from Saudi Arabia’s investment fund, most notably through SoftBank’s Vision Fund. And it threatens efforts by Yasir Al-Rumayyan, the mild-mannered managing director of the Saudi fund, to build the fund’s profile and make new tech investments.

    Mr. Al-Rumayyan, who this week presided over the polarizing Future Investment Initiative conference in Riyadh, which was once dubbed “Davos in the desert,” has emerged as a hugely important tech investor over the past two years. He has developed ties with CEOs of numerous high-profile public and private companies in the West, from Elon Musk to Richard Branson to Travis Kalanick, now the former CEO of Uber. Mr. Al-Rumayyan was the Saudi investor who met with Mr. Musk this summer to discuss the Saudi fund possibly backing a buyout of Tesla, a deal that didn’t get far but led to an SEC inquiry into Mr. Musk’s tweets. More significant is the Saudi fund’s $45 billion commitment to the Vision Fund, which has since taken sizable positions in Uber, General Motors’ Cruise autonomous vehicle unit, and WeWork, which rents office space. The Saudi fund also holds a direct stake in Uber, thanks to a $3.5 billion investment made in 2016.

    Mr. Al-Rumayyan plays a more active role in the Vision Fund than limited partners in tech funds typically do. He maintains “veto rights” over certain proposed investments by SoftBank that involve ride-hailing, due to his fund’s stake in Uber, and deals that are bigger than a certain size, according to a person briefed on the arrangement. Initially, that threshold was $2 billion, according to another person with knowledge of the fund, but the figure today is significantly higher. He also sits on the boards of SoftBank; Uber; ARM Holdings, a SoftBank-owned chip designer; and Saudi Aramco, the state-owned oil producer.

    While Mr. Al-Rumayyan isn’t familiar to most of the tech industry, he is well-known by a small group of bankers, investors and entrepreneurs in New York, San Francisco and Los Angeles, where he frequently meets with entrepreneurs backed by SoftBank and companies they have invested in directly, including Uber and Lucid Motors, three people who have met with him say.

    Bigger Ambitions

    And he has ambitions to get even bigger. The Saudi fund is trying to help WeWork and others in the SoftBank portfolio to bring their services to Saudi Arabia. Last year Mr. Al-Rumayyan announced a $20 billion commitment to private equity firm Blackstone Group’s fund to invest in U.S. infrastructure projects. And Mr. Al-Rumayyan just announced a $500 million investment in a Chinese-Russian joint investment fund, showing that he can turn to many other corners of the world if the West turns cold to his advances.

    Meanwhile, Mr. Kalanick, who visited Riyadh this week ahead of Mr. Al-Rumayyan’s conference, had privately expressed interest in potentially getting funding from Mr. Al-Rumayyan for his new startup, which wants to recycle distressed real estate, according to a person with knowledge of the situation. The Saudi fund has long invested in real estate projects. A representative for Mr. Kalanick didn't immediately respond to a request for comment.

    The Saudi fund is a key part of Prince Mohammed bin Salman’s Vision 2030, a 15-year plan to revitalize the country's workforce, including increased participation by women, and to diversify its assets and revenue away from oil, including through investments in technology. The goal was to boost the fund's value to roughly $2 trillion from $200 billion along the way, though part of the plan was to inject the fund with more cash from an IPO of Saudi Aramco, which did not happen.

    But the Khashoggi scandal could hurt those ambitions, particularly if more revelations about the killing emerge. Questions persist about the role of the prince, who is Mr. Al-Rumayyan’s boss, in the murder. Entrepreneurs in Mr. Al-Rumayyan’s digital rolodex, including Mr. Kalanick, are keeping mum about him publicly amid the crisis. But one associate said Mr. Al-Rumayyan was “a little bit bewildered by what’s going on.”

    The Khashoggi controversy overshadowed this week’s Saudi investment conference. Westerners such as Uber CEO Dara Khosrowshahi, JPMorgan Chase banker Jamie Dimon, and Uber board director Arianna Huffington decided to pull out. Mr. Khosrowshahi and Ms. Huffington had attended last year.

    Meanwhile, Ari Emanuel, who leads the Endeavor entertainment conglomerate in Hollywood, is in the process of unwinding a $400 million investment made by the Saudi fund in the company earlier this year, according to a person familiar with the situation. The divestiture is expected to be completed “soon,” this person said. (Several publications, including the Hollywood Reporter, previously reported on Mr. Emanuel’s desire to sever ties with the fund.)

    Virgin Group founder Richard Branson recently said he would suspend a plan to let the Saudi fund invest in his space tourism venture. And other tech entrepreneurs might think twice about taking money indirectly from Saudi Arabia through SoftBank; one tech company in SoftBank’s portfolio briefly considered trying to return 45% of the money it got from the investor, a percentage that represents the Saudis’ overall share in the SoftBank fund, said an executive at the company. The founders concluded that would not be easy to pull off, this person said. And there is speculation that SoftBank may not let the Saudis into its next big tech fund.

    Privately, some entrepreneurs told The Information that Mr. Al-Rumayyan is an amiable, earnest businessman who has expressed a desire to help modernize Saudi’s economy and workforce.

    Mr. Al-Rumayyan [whose first name is pronounced YAH-sir], a longtime investment banker who took control of the 47-year-old sovereign fund three years ago, is just as comfortable wearing a western business suit or golf attire as he is the traditional Saudi garb, according to associates.

    He was educated as an accountant, according to a biography posted during a 2013 conference, and held a series of banking roles before working for the country’s capital markets regulator. When the prince’s father became Saudi’s king in 2015, Mr. Al-Rumayyan ascended to run the Public Investment Fund after having run a well-known Saudi financial services firm, partly owned by French bank Credit Agricole, during the prior four years.

    Associates say he does not come across as an experienced tech investor, despite being among the world’s biggest. After all, he only got started three years ago. (Representatives for Mr. Al-Rumayyan did not respond to requests for comment.)

    “He’s like a JPMorgan banker,” said one associate, who said Mr. Al-Rumayyan stands in contrast to “arrogant royal types” who hold many positions of power in the kingdom. “I figured that’s probably why MBS chose him [to lead the Saudi fund],” this person said. Mr. Al-Rumayyan holds the official title of “His Excellency,” thanks to his senior government positions.

    Mr. Al-Rumayyan and Prince Mohammed exploded onto the global investment scene with the eye-opening $3.5 billion investment in Uber deal in 2016, the largest of its kind at the time. Previously undisclosed details about the Uber deal show how Mr. Al-Rumayyan turned an encounter with Uber’s then-head of public policy into Saudi Arabia’s coming out party as a global power player in tech.

    Since then, the unassuming Mr. Al-Rumayyan, who travels in private jets and is known as an avid golfer, has expanded his sphere of influence. He invested $2 billion in Tesla, a move that Mr. Al-Rumayyan’s associates believe originated with Prince Mohammed, who has expressed an interest in autonomous and electric vehicle development. The Saudi fund also invested $400 million in Magic Leap, which is developing an augmented reality headset; and $200 million in Jay Penske’s expanding media empire, which includes Rolling Stone, Variety and Deadline.com.

    Mr. Musk did not have comment about his dealings with the Saudi fund. Nor did another electric carmaker, Lucid Motors, which last month announced a $1 billion investment deal with Mr. Al-Rumayyan and provided a prototype vehicle to this week’s event, according to photos taken at the event. Magic Leap CEO Rony Abovitz and Mr. Penske did not respond to a request for comment.

    Uber Lore

    The story of the Saudi investment has become lore inside some parts of Uber, though most managers heard details of the deal only after it was announced. In early 2016, shortly after Uber had secured funding from other sources at a $62.5 billion post-investment valuation, an Uber public policy adviser, David Plouffe, was introduced to Mr. Al-Rumayyan during a Middle East trip, said three people who were briefed about the chronology. Mr. Plouffe, who apparently hadn’t heard of the Saudi fund chief, introduced him to other Uber executives. Mr. Al-Rumayyan wanted to understand why the company was losing billions of dollars a year and how big the business might eventually be, one of these people said.

    Mr. Kalanick hoped the investment could help blunt the impact of Apple’s $1 billion investment in Chinese ride-hailing rival Didi Chuxing and help him win the global ride-hailing war. Messrs. Kalanick and Al-Rumayyan met in person and, with JPMorgan Chase advising the fund, eventually came to a deal. Mr. Al-Rumayyan insisted on getting a seat on Uber’s board—an unusual move for a sovereign wealth fund, this person said.

    The investment prompted questions from some Uber employees. At an all-hands meeting afterwards, an employee asked Mr. Kalanick why he took the money. The question implied that the country’s regime was viewed as oppressive and did not share the company’s values—for instance, by not allowing women to drive, according to one attendee. Mr. Kalanick replied that he took the Saudi money to build a global business that helps people, this person said.

    As a member of the Uber board, Mr. Al-Rumayyan was “laid back” and almost “never said a word” during quarterly board meetings at Uber in San Francisco, said one person who attended several of them. He was “so neutral. You don’t hear a peep,” this person said. The fund manager was not part of the investor group led by Benchmark partner and board director Bill Gurley, which overthrew the CEO, say people who were involved in the battle.

    For a while it seemed as if Uber’s paper valuation might fall dramatically, but the company’s crises mostly subsided and the business continued to grow. On paper, though, the original Saudi stake is worth the same as in 2016, on a price-per-share basis.

    —Juro Osawa, Jessica E. Lessin, Jessica Toonkel, Wayne Ma, Alfred Lee, Aaron Tilley, Beejoli Shah contributed to this article.

    CLARIFICATION: Ari Emanuel leads the Endeavor entertainment conglomerate, which owns William Morris Endeavor. An earlier version of this article said Mr. Emanuel leads WME. The article also has been updated with more information about the Saudi veto rights in the SoftBank Vision Fund.

    https://www.theinformation.com/arti...hEA0cwloICQKUY8l8e7e4&unlock=39dc2163fc0f3866
     
    tohunt4me likes this.
  2. Yes.
    We must speak out on the murder of Journalists . . .

    If you can FIND A VENUE THAT WONT CENSURE & SILENCE THE VOICE SPEAKING OUT . . .
    BIAS LIBERAL POLICY = LIMITED VOICES TO BE HEARD.

    They only need channel funds through Switzerlands Banks.

    Just as Iran did exporting oil.

    Funny how land locked neutral countries own shipping tonnage . . .

    But thats none of my business.

    For a small fee
    I would be Happy to aide in " "arrangements".

    Iranian Heavy crude can only be handled by a few specific refineries.

    So heavy discounts & neutral shipping are important to bypass U.N. sanctions.

    Figure the Rest out on your own.

    " Everywhere"

    ( next week : Directional Drilling across International Borders ! A.k.a. - " it takes a thief".)
     

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    Last edited: Nov 5, 2018
  3. Good !
    The Saudis prop up the U.S. Dollar.
    I have a Long Detailed Memory.
    I walk around some sleeping dogs.
     
  4. Uber's Guber

    Uber's Guber

    Location:
    United States
    Driving:
    UberX
    But Hillary Clinton will still take Saudi money.
     

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