It’s noon, no, not that noon, but Noon.com. The Middle East’s newest e-commerce site opens its doors this month. Noon represents the ever expanding technology portfolio of the Saudi Arabia Public Investment Fund (PIF). In 2016, the PIF invested $3.5 billion in Uber, up to $45 billion in the Softbank Global Vision Fund, and now $500 million in Noon.
PIF’s activities are part of a broader strategy to diversify the Kingdom’s oil-based economy. Unlike the petro-states of Abu Dhabi, Qatar, and Kuwait, the Kingdom is a very, very, very, late player in the Sovereign Wealth Fund arena. For example, the Abu Dhabi Investment Authority was established in the 1970s and is now one of the largest sovereign wealth funds with over $800 billion in assets.
To catch up, the Saudi’s are monetizing their holdings in Saudi Aramco through a coming public offering. Over the time, the PIF is supposed to diversify from oil into other assets, such as technology, and provide revenue to the Government. The PIF will also developed non-oil based industries. The PIF’s $3.5 billion Uber investment could in theory provide employment to young Saudis and provide needed mobility to transportation poor cities such as Riyadh.
While the PIF may have lots of money, that won’t necessarily make the Kingdom richer. Ever since they discovered oil, the Saudis have been trying to diversify from oil. In the past decade, lots of money was spent developing cities and projects, such as King Abdullah Financial District or King Abdullah Economic City, to expand the economy, without much success.
So what the Kingdom really needs is better intellectual capital, rather than more financial capital. And while it’s currently staffing the PIF to handle the coming funds, the Kingdom really needs deal-makers. Thus the PIF investment in the Softbank Global Vision is the first right step. For its $45 billion, the Kingdom gets access to Masayoshi Son’s brain and his M&A team. And this another reason for the Noon investment.
By investing in Noon, the Kingdom is also investing in the always youthful, very smart, and master builder, Mohammed Alabbar. Mr. Alabbar is the other part of Noon. To achieve his goals, Mr. Alabbar has purchased stakes in the logistics company, Aramex, and the fashion company, Yoox Net-a-Porter. His goal is to create an e-commerce site that will compete with Souq.