SoftBank Group's logo at a company function in Tokyo, Japan. Picture: REUTERS/ISSEI KATO
SoftBank Group's logo at a company function in Tokyo, Japan. Picture: REUTERS/ISSEI KATO

Dubai — SoftBank has hired Deutsche Bank to advise it on its power investment plans in Saudi Arabia, two sources familiar with the matter said.

The Japanese company, which is planning to invest in a giant solar power plant in the kingdom, has also shown interest in electricity distribution in the world’s top oil exporter, the sources said.

One source said SoftBank could consider purchasing a minority stake in Saudi Electricity from the Public Investment Fund (PIF) sovereign wealth fund.

“They want to become a minority shareholder of influence,” the source told Reuters.

PIF owns a 74% stake in Saudi Electricity. The other major shareholder is state oil giant Aramco, which owns a nearly 7%  stake.

A SoftBank spokeswoman declined to comment. PIF and Deutsche Bank also declined comment. Saudi Electricity did not respond to a Reuters request for comment.

In March, SoftBank Group CEO Masayoshi Son said he had signed an agreement to create the world’s biggest solar power generation company in Saudi Arabia, which would have a capacity of 200GW by 2030.

More details on the project are expected to be disclosed in the first quarter of 2019, a third source said.

Vision Fund

Son has defended SoftBank’s ties with Saudi Arabia following a global outcry over the murder of journalist Jamal Khashoggi in the country’s Istanbul consulate in October, saying his company has a responsibility to Saudi citizens whose money is invested in its Vision Fund.

Saudi Arabia has provided about half of the $93bn raised by SoftBank for the fund, which has become one of the primary funding vehicles for technology companies around the world.

Saudi Arabia is embarking on a push to transform the economy and reduce its dependence on oil. It views solar power as a way to cut the amount of crude it uses to generate power at home and raise its overseas shipments.

The government also wants to privatise Saudi Electricity as part of wider reforms to its energy sector. It had planned to split the Gulf’s largest utility firm into separate companies that would be offered either to local citizens through initial public offerings or to local or international corporate partners.

But the plan has been delayed as the kingdom reviewed energy subsidies to cut domestic consumption and reduce waste.

The state says it will gradually increase energy prices until 2020, helping the company to achieve a more sustainable financial model.

To meet rising demand, Saudi Electricity has had to increase its capex through borrowing. It has more than 160-billion riyals ($42.7bn) of debt, nearly half of it from commercial loans.

Reuters