Saudi Arabia’s Lenovo Deal Showcases Cash for Investments Strategy

Saudi Arabia’s plan to invest $2 billion in Lenovo Group Ltd. is the latest example of a strategy to use the kingdom’s cash pile to lure foreign companies and become the Gulf’s tech hub.

Bloomberg
First Published29 May 2024
Saudi Arabia’s Lenovo Deal Showcases Cash for Investments Strategy
Saudi Arabia’s Lenovo Deal Showcases Cash for Investments Strategy

(Bloomberg) -- Saudi Arabia’s plan to invest $2 billion in Lenovo Group Ltd. is the latest example of a strategy to use the kingdom’s cash pile to lure foreign companies and become the Gulf’s tech hub. 

Alat, a unit of the powerful Saudi sovereign wealth fund, said early on Wednesday that it would invest in a Lenovo convertible bond. In return, the Chinese computer-maker pledged to open a manufacturing facility and establish a regional headquarters in Saudi Arabia. The kingdom said it expects its investment to create 15,000 direct jobs locally, and add $10 billion to gross domestic product by 2030. 

Attracting foreign investment has become a key focus for the country under Crown Prince Mohammed Bin Salman and his plan to diversify the oil-dependent economy. It’s also part of an unfolding rivalry with the neighboring United Arab Emirates to dominate the tech industry in the region, a race that also includes data centers and artificial intelligence. 

Read More: Saudi Arabia, UAE Rush to Build Data Centers in Race to Win AI

Saudi Arabia’s $1 trillion Public Investment Fund, which has become a prominent tech investor in recent years, is increasingly using its heft to require foreign companies to invest in Saudi Arabia in return. 

With $100 billion to spend, the PIF’s Alat unit looks set to become a powerful force to further these goals. It can offer money to firms willing to help its ambitions to make Saudi Arabia a powerhouse in electronics manufacturing. Earlier this year, it announced a string of deals, including partnerships with SoftBank Group Corp. and a Chinese surveillance equipment maker to set up local manufacturing facilities. 

The UAE has struck its own deals, winning an investment from Microsoft Corp. for state-backed Abu Dhabi AI startup G42 last month. 

Read More: Middle East’s Emerging AI Powerhouse G42 Chooses US Over China

Saudi cash has already been put to work disrupting in other industries. 

A deal to give BlackRock Inc. $5 billion earlier this year was predicated on the US asset manager building a Riyadh-based team to manage it and invest it in the Middle East. An earlier investment in electric carmaker Lucid Group Inc. led to the company opening a plant on Saudi Arabia’s west coast.

(Updates with additional details throughout)

More stories like this are available on bloomberg.com

©2024 Bloomberg L.P.

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