The Public Investment Fund (PIF), the sovereign wealth vehicle of Saudi Arabia, is set to acquire a majority stake in MBC Group, a leading media organization in the country. The deal will see PIF acquiring a 54% stake for SR7.46 billion ($1.99 billion), marking a significant shift in its investment strategy.
The acquisition was revealed last week through an official filing and involves PIF taking over the entire stake previously held by Istedamah Holding firm. This translates to approximately 179.55 million shares.
However, MLBC has clarified that this deal is still subject to various conditions and necessary approvals before it can be finalized. It will be executed as per the trading and membership procedures of the Saudi Exchange upon completion of all formalities.
Shift towards domestic investments
This move comes on the heels of PIF's governor, Yasir Al-Rumayyan's announcement last month about reducing international investments and focusing more on domestic projects instead.
Currently, overseas investments including sports properties like Newcastle United soccer team constitute about 30% of its reported $900 million portfolio. Al-Rumayyan plans to reduce this figure down to between 18%-20%.
Diversifying revenue streams
PIF aims at reducing Saudi Arabia’s dependence on oil revenue by expanding into other business sectors such as sport. This includes investments in soccer (Al-Rumayyan is Newcastle's chair), golf (through LIV Golf tour), and combat sports under Riyadh Season sports and entertainment festival brand. With more high-profile events expected within Saudi Arabia, it seems clear that both country enterprises including PIF are shifting their focus towards internal investment - both for sporting events – now being main backer for four Saudi Pro League teams – as well as major infrastructure projects like NEOM city.
These massive infrastructure projects, known as “giga-projects”, have recently been scaled back due to their enormous cost. This could be another reason why the fund is looking to channel more investment domestically. MBC Group's streaming platform Shahid covers a wide range of sports including soccer, motorsport, American football, boxing and mixed martial arts. The soccer rights held include domestic properties such as the Saudi Pro League and Kings Cup, Asia’s AFC Champions League and Asian Cup, and Spain's Copa del Rey.
Despite past accusations of sportwashing against PIF - using sports investments to launder the reputation of the Saudi regime - these are unlikely to deter PIF from its goals. With this new focus on domestic investment and reduced international influence in sport, such accusations may lessen in future.
