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Japan's SoftBank teams up with... Saudi Arabia to launch $100bn London tech fund

Saudis: You want to do this? SoftBank: Yeah man. Saudis: Don't mention Yemen!

Cash in brown paper envelope CC 2.0 attribution StockMonkeys.com
Photograph from StocMonkeys.com

SoftBank and Saudi Arabia's sovereign wealth fund are preparing to launch a technology investment fund, to be based in London, which will invest as much as $100bn into the global tech sector.

Tentatively dubbed the SoftBank Vision Fund, the investment vehicle will operate over the next five years and will be seeded with $25bn from SoftBank and up to $45bn from Saudi Arabia's sovereign wealth fund.

According to today's non-binding memorandum of understanding, there's still room for “a few large global investors” who are talking to the pair to participate in the fund.

Japanese telco SoftBank acquired UK chip designer ARM for £24bn in July, as it moves away from the carrier business and deeper into the technology sector.

The company had initially promised to “at least double” the number of employees at ARM after the acquisition — which took place during the Sterling's post-Brexit referendum slump. However, Japan later warned that Japanese companies (which ARM now is) could move their head offices out of the UK if trade negotiations didn't favour the country's interests.

While the potential targets of investment from the fund are expected to benefit ARM, it is not yet known how SoftBank Vision Fund will be investing in companies, although as an investment vehicle rather than a venture fund it is not expected to be attempting to purchase board seats.

Saudi Arabia's sovereign wealth fund, known as the Public Investment Fund (PIF), is a state-owned investment fund which is controlled by the distributed and despotic monarchy as a means of reducing the Islamic nation's reliance upon fossil fuels.

The state — currently engaged in a brutal and costly war in Yemen — is struggling to escape its dependence on oil, which is currently plunging in price - affecting both the country's means of producing energy and generating wealth through its production.

According to the PIF's chairman, the deputy crown prince Mohammed Bin Salman, the Saudi fund is “focused on achieving attractive long-term financial returns from its investments at home and abroad, as well as supporting the Kingdom's Vision 2030 strategy to develop a diversified economy.”

Salman stated the Saudis were “delighted” to be working with Masayoshi Son, the chairman and CEO of SoftBank, who himself declared: “Over the next decade, the SoftBank Vision Fund will be the biggest investor in the technology sector. We will further accelerate the Information Revolution by contributing to its development.” ®

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