Saudi Wealth Fund’s Lucid Windfall Will Make Up for Tesla Exit

Tesla

  • PIF first invested $1 billion in electric automaker in 2018
  • Saudi fund sold out of Tesla before its momentous rally

The second time proved the charm for Saudi Arabia’s foray into electric vehicles.



The kingdom’s main sovereign wealth fund is sitting on paper gains of over 30-fold from its investment in Lucid Motors Inc., with the value of its stake set to rise as part of a deal to take the company public.

The result is a boost for the $400 billion Public Investment Fund after missing out on an epic rally in Tesla Inc. shares when it sold much of its 5% stake in the industry leader at the end of 2019.

The PIF, as the fund is known, will hold a stake of 62% in Lucid once the acquisition of the automaker by special purpose acquisition vehicle Churchill Capital IV is complete. The holding would be valued at about $32 billion, based on the current share price of Church Capital IV.

The deal would represent a jackpot for the PIF, which invested $1 billion in Lucid in 2018 and is expected to provide an additional $600 million in funding for the company before the SPAC deal is completed. It also participated in a $2.5 billion private investment in public equity, or PIPE, the largest of its kind on record for a SPAC deal.



Under the leadership of Yasir Al-Rumayyan, the PIF has shifted investment priorities from holdings in state-owned companies to building up stakes in companies such as Uber Technologies Inc. and Jio Platforms Ltd., the digital services business controlled by Indian billionaire Mukesh Ambani.

The fund’s returns on investment increased from about 3% between 2014 and 2016 to 8% from 2018 to 2020, according to the PIF website. It has more than doubled its assets in the five years since Crown Prince Mohammed bin Salman has been chairman.

The investments are part of a strategy that aims to boost returns from the kingdom’s wealth while diversifying the Saudi economy and creating jobs.

Bloomberg News reported in January that Lucid was in talks with the PIF to potentially build a factory near the Red Sea city of Jeddah, although the automaker’s CEO, Peter Rawlinson, said on Tuesday there were no imminent plans to build a factory in the kingdom.

— With assistance by Edward Ludlow, and Filipe Pacheco

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