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Chapter 473 Purpose

"You're right. The original purpose of PIF was to provide strong support for the development of Saudi Arabian domestic enterprises."

After expressing his feelings, Muhammad finally brought the topic back on track: "However, there is too much money, and the number of high-quality investment projects that the domestic market can support is limited, so we have to seek investment opportunities in overseas markets."

"What a damn show-off," Ernst muttered to himself.

However, he did have the capital to show off. Ernst thought to himself that all his assets combined probably didn't even amount to as much as the cash flow from the Saudi sovereign wealth fund.

The outside world has no idea how much money the Saudi sovereign wealth fund has, because the fund has been established for more than 20 years and still does not have a clear positioning.

It wasn't until 2015 that PIF formally established a clear and transparent core leadership structure, while transferring jurisdiction from the Ministry of Finance to the newly established Economic and Development Affairs Committee. Only then did it begin to gradually disclose relevant information about the fund to the outside world.

According to data released by the PIF at the end of 2015, its assets amounted to 5700 billion Saudi riyals, equivalent to approximately US$1520 billion.

But in 1998, the actual amount of money controlled by this sovereign wealth fund may have far exceeded that figure.

Because although the new PIF after the restructuring also gathered a large amount of liquid funds, the proportion of fixed assets was extremely low.

Where did the assets that PIF previously invested in go? Were they not invested at all?

This is impossible.

The most likely explanation is that PIF divested some of its assets and chose to hide them, leaving behind only the cash flow in PIF's possession.

"So, the Saudi sovereign wealth fund is planning to enter overseas markets?" Ernst asked curiously, wondering to himself if the fund's overseas investment model was about to be determined in advance.

"You could say that's a fair interpretation," Muhammad gave an ambiguous response.

He raised the teacup in front of him as a gesture, but Ernst did not intend to drink with him, because he simply could not get used to the taste.

People in Saudi Arabia and the Middle East generally enjoy drinking tea, but influenced by British culture, they are accustomed to adding a lot of sugar to their tea.

Because the locals have an extremely high preference for sweetness, almost to the point of being addicted to sweetness, they put a lot of sugar in their tea.

To neutralize the sweetness of cane sugar, they would also add spices such as cinnamon and cardamom to the tea. This unique tea flavor was unacceptable to Ernst.

Muhammad didn't insist, and after signaling the servant to make Ernst another cup of coffee, he and Louis drank together.

After putting down his teacup, he explained, "In fact, there have always been two different opinions within the fund regarding investment direction."

"Among them, the conservatives advocate for a deep exploration of the investment potential of the domestic market. They believe that Saudi Arabia lags far behind international advanced levels in the field of financial investment and lacks sufficient experience. If it rashly enters the international market, it is very likely to face huge losses or even lose everything."

"The other side firmly advocates exploring overseas markets and seeking high-quality investment opportunities globally."

"Saudi Arabia possesses abundant oil resources, a fact known to the world. However, the affluent lifestyle that oil resources can support can only last for one or two generations, not for our future generations to achieve long-term sustainable wealth accumulation. From a long-term development perspective, promoting overseas investment is an inevitable choice."

"So you're one of the key promoters of the overseas faction?" Ernst asked casually.

"I wouldn't call myself a promoter; I'm just the person in charge of the specific implementation of overseas investment matters."

Muhammad pointed to the scenery before them and asked, "What do you think of the environment in this area?"

Ernst turned his head and had to admit that the environment here was extremely superior.

This place is somewhat similar to Woodside, both being located on a hilltop, offering expansive views, and possessing the natural advantages of being nestled against the mountains and beside the water.

However, unlike Woodside, where the hilltop area is flat, this area is dominated by rugged mountains.

"The environment is excellent. Standing here, you can see directly into East Los Angeles, offering a superb view."

Muhammad smiled with satisfaction. "If I were to transform this area into a high-end health and wellness center, what do you think the market prospects would be?"

Ernst glanced at Louis Astor instinctively; this must be the project he initiated, right?

"That's a good choice. If I'm not mistaken, this place should be in Monterey County, right?"

Carmel Valley in Monterey County is a renowned affluent area, adjacent to Highway 1, surrounded by dozens of top-notch golf courses, and also boasts a rich cultural and artistic atmosphere.

Opening a high-end wellness center here, Carmel Valley alone can provide enough customers.

For older high-net-worth individuals, it's quite appealing to relax, breathe fresh air, and rejuvenate here while playing golf together.

"Our family has had a close relationship with the Astor family for over twenty years. When I went to the United States to seek investment opportunities, Louis provided me with a lot of help. Besides this wellness project, the first person he recommended to me was you."

Ernst doesn't like the word "goal," but you have money, so you get to decide.

Ernst's gaze inadvertently fell on Louis Astor again. It was obvious that Mohammed's family must wield considerable influence in Saudi Arabia, otherwise he would not have been chosen as the person in charge of overseas investment affairs.

The friendship of more than 20 years coincided with a critical period of large-scale development and construction in Saudi Arabia.

Ernst even suspected that the Astor family had contracted out all the real estate projects in Riyadh.

However, Ernst finally understood why the other party had approached him. As the son of the Internet, who in America would dare to guarantee that they knew more about the Internet industry than he did?

For overseas investors to gain an absolute advantage in the struggle with conservatives and leave their opponents speechless, they must let their solid investment performance speak for itself.

In the current market environment, apart from the Internet industry, there are almost no other sectors that can achieve significant returns on investment in the short term.

That's why Muhammad took the initiative to approach him and was even willing to give him ample room for negotiation, allowing him to name his price as he pleased.

"You're not only interested in Google, are you?" Ernst's tone was confident, yet he couldn't hide his anticipation.

Ernst didn't care whose money it was, as long as someone was willing to give him money to squander.

He was more satisfied with the funds from the Saudi sovereign wealth fund than with the capital on Wall Street.

Wall Street investment institutions are mostly engaged in speculative investing, focusing on short-term gains rather than long-term value investing.

Sovereign wealth funds and pension funds, on the other hand, are quite different; they tend to hold high-quality assets for the long term.

This is also the core reason why many listed companies favor such funds. Some companies will even issue new shares to these funds at a price lower than the market price.

Because these types of funds have a more stable investment style, they can provide long-term support for corporate development and play a ballast role.

Flashbuy can forget about getting funding from Wall Street giants; none of Bill's shareholders would support it.

The remaining companies, which have no connection with Bill, will definitely use this as an opportunity to lower prices.

Ernst never intended to go all in on Wall Street; he always wanted to get in touch with Silicon Valley's funding and retirement institutions.

Especially for elderly care institutions, these people have a lot of money, much more than the funds in Silicon Valley.

Now that the West is dark while the East is bright, and the big dog has come knocking, how could Ernst not be excited?

One point he strongly agreed with was the conservatives' concern about a lack of experience.

The American capitalist system is mature and sophisticated; now, anyone who attaches hair to it becomes a monkey—they're all incredibly shrewd.

To gain an advantage from them, you'd have to be as successful as Google.

But Saudi Arabia's capital is different; Ernst doesn't mind wielding his dragon-slaying sword.