The Saudis have made a major bet on Related
MBS-controlled Public Investment Fund buys debt convertible into 15% of equity of megadeveloper
Stephen Ross’ Related Companies has landed a major investment from the Public Investment Fund, the sovereign wealth fund controlled by Saudi Arabia’s crown prince Mohammad Bin Salman Al Saud, according to a new report.
Related closed on the deal with PIF in the first week of February, according to Vanity Fair, when the real estate market was still robust and the coronavirus pandemic hadn’t yet ravaged the global economy. The investment comes in the form of convertible debt, convertible into 15 percent of the development firm’s equity.
Related is one of the most prominent private real estate developers in the country, with megaprojects such as the $25 billion Hudson Yards on Manhattan’s Far West Side, the Time Warner Center in Columbus Circle and Related Santa Clara in Northern California. Ross, the founder and chairman of Related, is the wealthiest real estate developer in New York, with a net worth of $7.6 billion according to Forbes.
The Public Investment Fund is chaired by Bin Salman, known as MBS, who rose from relative obscurity to seize power in Saudi Arabia by forcing his uncle out to become crown prince in 2017. He has since become the de facto ruler of the wealthy kingdom, and heads the $320 billion PIF, one of the world’s most prominent sovereign wealth funds. MBS burst into global consciousness in November 2017, when he ordered some 200 wealthy businessmen and princes to be placed under house arrest in Riyadh’s Ritz-Carlton hotel. And he became even more notorious the following year when Saudi operatives brutally murdered the Saudi dissident and journalist Jamal Khashoggi.
Neither Related nor PIF publicly announced the investment, and did not comment to Vanity Fair. Related has had a long history of working with foreign investors: Saudi conglomerate Olayan Group is also a debt investor in the company, and other investors include the Kuwait Investment Authority.
PIF has been scouring the globe for investment deals, bargain-hunting for assets whose valuations have plummeted since the coronavirus struck. Last week, it agreed to buy English soccer club Newcastle United in a deal worth $375 million. It also bought stakes in cruise operator Carnival and oil companies Royal Dutch Shell, Total, Repsol, Equinor and Eni in recent weeks, according to the Financial Times.
Saudi Arabia is one of the world’s largest producers of oil, which is by far the largest source of state revenues. On Monday, oil prices dropped below $0 for the first time in history. [Vanity Fair] — TRD Staff