Saudi Arabia Invested in a Chinese Fund

By Ren Qian

AnYong Waves has learned that Jada, the fund-of-funds arm of Saudi Arabia's sovereign wealth fund PIF, has committed to eWTP Arabia Capital's second USD-denominated fund, which is currently in the market. The new fund is targeting $1 billion and is expected to close in early 2024, with Jada serving as its anchor LP.

The fund will focus on technology and energy investments. The partnership with Jada builds on eWTP Arabia Capital's core strategy — leveraging technologies, products, and business models already proven in Asia to help build Saudi Arabia and the broader Middle East and North Africa (MENA) region's tech ecosystem. This is what sets eWTP Arabia Capital apart from other Chinese GPs looking to crack the Middle East: its investments are backed by Asian resources but rooted in the Middle East, rather than treating the region merely as a source of capital.

eWTP Arabia Capital is a technology-focused investment fund headquartered in Riyadh and Beijing, targeting the Middle East and North Africa. Notably, Jada was also the anchor investor in eWTP Arabia Capital's first fund, which totaled $400 million and has backed 18 companies. Jada Fund was established with PIF investment as a key component of Saudi Arabia's Vision 2030. To transform a business landscape long dominated by state-owned enterprises and family conglomerates, Jada specifically invests in innovative funds with the aim of steering Saudi Arabia's investment ecosystem toward supporting the growth of local SMEs and startups. Through Jada, PIF seeks to create more jobs while accelerating economic diversification and increasing the private sector's — particularly Saudi SMEs' — contribution to GDP.

As AnYong Waves noted in "The Trek to Riyadh," compared to the UAE, Saudi Arabia's PIF has historically maintained an air of mystery. Though founded in the 1970s, it made few conspicuous moves abroad until the current crown prince came to power. Since then, PIF has become notably active — committing $45 billion to SoftBank's Vision Fund, taking Saudi Aramco public, acquiring football clubs, and investing in numerous global VC/PE firms and industry leaders.

In recent years, PIF has been pouring money into tech companies and startups. By one count, since 2017 PIF has proactively created roughly 80 companies across 13 industries. Beyond its traditional strongholds of real estate, infrastructure, and energy, PIF has concentrated on technology, tourism, and entertainment — the three sectors where Saudi Arabia was previously most deficient. The fund also operates another venture arm, Sanabil.

PIF's ties with Asia, and China in particular, have been growing tighter. Just yesterday (December 7), PIF Governor and FII Institute Chairman Yasir Al-Rumayyan revealed at the Future Investment Initiative's inaugural Asian summit in Hong Kong that PIF will strengthen its Asia connections and plans to open offices in mainland China and India. To date, PIF has only one Asian outpost, established in Hong Kong in February 2022.

In the current market environment, perhaps only the most top-tier, specialized funds stand a chance of partnering with PIF. Unlike several other established Chinese GPs that have secured Middle Eastern capital, eWTP Arabia Capital is young. It spun out from the eWTP Fund, relocated from India and Southeast Asia to the Middle East in 2019, and has drawn considerable attention as the region became a global investment hotspot.

In late 2018, the eWTP team decided to expand into more global markets. Setting out from New Delhi, they began making frequent trips to Gulf countries within a four-hour flight radius — the UAE, Saudi Arabia, Oman, Kuwait — conducting deep due diligence across the entire Middle Eastern market. They quickly discovered that the region exceeded expectations across metrics including consumer spending habits, youth population, and internet infrastructure. For instance, at the end of 2018, the average delivery cost in the Middle East was about $13, and one luxury e-commerce platform they visited had an average order value of $280.

"This is a massive opportunity," said Jerry Li, founder and managing partner of eWTP Arabia Capital. Over the past four years, the firm has helped 18 international companies expand in the region, including the Saudi Cloud Computing Company — a joint venture between Alibaba Cloud and Saudi Telecom Company (STC) — and J&T Express Middle East. They provide portfolio companies not just capital but on-the-ground expertise and substantive operational support.

Commenting on the investment, Bandr Alhomaly, CEO of Jada Fund of Funds Company, said: "We will continue to serve as a growth catalyst for the local private equity and venture capital ecosystem, aiming to foster innovation and job creation in the Kingdom of Saudi Arabia, including attracting foreign direct investment and supporting knowledge and technology transfer."

Image source | Visual China

Layout | Guo Xuemei