SoftBank was supposed to launch its second portfolio with an investment for the Kingdom of Saudi Arabia and the UAE. Clearly, following these losses of KSA, the payment was from the UAE government, which was directing KSA in the first periods of bin Salman’s ruling, however, KSA quickly announced that it is not going to invest in the second portfolio.
The Gulf States Analytics Corporation in Washington commented on KSA’s losses and the SoftBank crises, saying: “SoftBank was a bad investment for everyone, in terms of concept and implementation,” and “It was a long-term investment (for the Saudi Authority), but it hit the brick, and politics mixed in it a lot, leaving some Saudis feeling bitter”.
It is worth noting that the Saudi government had hoped to benefit from the emerging companies and advanced technology locally and in diversification projects, including the city of NEOM.
MBS told Bloomberg in a 2017 interview: “We want the main robot in NEOM to be the first robot. Everything will be connected to artificial intelligence and the Internet, everything.”, however, the “NEOM” project has become a subject of discussion on whether it has been postponed or cancelled, due to the current financial crisis.
Aramco’s privatization in the long term may help in selling its shares as a way to increase the authority’s treasury to 3 trillion dollars, which is difficult and not apparent in light of international investors’ skepticism about the first IPO process and when oil prices were high.
However, the drop in oil prices has affected Aramco’s plans to purchase 70% of the shares of the Petrochemical Company – SABIC – from the Public Investment Authority for an amount of 69.1 billion dollars.
Due to the current crisis, the value of SABIC fell by 40% this year and became $45 billion, which means that $25 billion must be paid by Aramco. Feif believes that “the decline in oil prices has had an impact on the SABIC deal and how Aramco's resources are used.”
Investment specialists said that SoftBank will recover with time. No one denies that SoftBank’s numbers were disastrous but the Authority’s investments during Covid-19 in a number of industries will reap in the future, and “there are loans and funds through which investment around the world will be possible.”
Nevertheless, the great impact on the Investment Authority is Aramco, whose shares have declined due to the drop in oil prices, which would postpone any privatization plans for parts of it; leading tweeters to mock the Saudi Crown Prince, that he brought bad luck to the bank and all the companies he is investing in, due to the great losses, which affected the bank's reputation in the field of investment. As soon as bin Salman announced that he would not complete the investment with SoftBank in its second portfolio, the bank announced its recovery from the crisis.
