Softbank Saudi success story: Beyond Information Revolution

Softbank’s announcement of quarterly operating profits that almost doubled to $6.2 billion, highlights the Saudi contribution to the “Information Revolution” that is stimulating the global technology industry.

The domestic implications of Saudi investment into technology is the acceleration of social reforms – particularly with regard to women’s empowerment, ultimately improving investment prospects.

Vision Fund

Despite analysts projecting $1.9 billion Softbank net profits, the Japanese technology conglomerate exceeded expectations and delivered $4.6 billion net profits.

On top of benefitting from higher values on high tech investments, Softbank’s successes are largely a result of Softbank’s Vision Fund, responsible for 45 percent of Softbank’s operating profits. Softbank’s Vision Fund specialises in investing in emerging technology.

Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala Investment Company provide over three-quarters of the fund’s $93 billion total – with the Saudi PIF investing $45 billion and Abu Dhabi’s MIC investing $15 billion.

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Softbank’s successes are a source of optimism for the Vision Fund. Richard Kaye, a portfolio manager for French asset manager Comgest, was reported in the Financial Times to confirm that: “more investors will start to understand the potential benefits of the Vision Fund if strong figures continue coming out”.

Moreover, the Vision Fund and Softbank’s successes are showcasing how Saudi investment is stimulating the global technology industry and leading the “Information Revolution”.

Founder & amp CEO of SoftBank Group, Masayoshi Son, speaks during a keynote speech at the Mobile World Congress in Barcelonaon February 27, 2017. (AFP)

Information Revolution

Beyond the $2 billion investment on Tesla and the $3.5 billion investment on Uber, it is the Saudi investment into Softbank’s Vision Fund that is sowing the seeds for an Information Revolution: unprecedented large-scale and long-term investments in emerging technology.

The Vision Fund is investing in fields that a central to the future of humanity, funding innovation in: consumer internet businesses, financial technology, computational biology, communications infrastructure and mobile computing.

Recently, two start-ups have received investment: Zume, who use robots to make pizza, got $375 million and View, who make glare-moderating glass for windows, got $1.1 billion.

In addition, the Saudi-Softbank partnership also has ambitious plans to employ technology in pursuit of renewable energy, with plans for the world’s biggest solar power generator planned to start generating electricity in Saudi Arabia within two years.

ALSO READ: Saudi Public Investment Fund invested in 50-60 firms via SoftBank fund

Softbank CEO Masayoshi Son said: “[the solar power project] would never have been feasible without the big vision we shared with the Crown Prince[…] the Kingdom has great sunshine, great size of available land, great engineers, great labourers […] but most of importantly it has the greatest vision”.

Via technology, Saudi Arabia exports its internal modernisation ambitions. Stakeholders that are both seeking Saudi investment, and seeking to invest in Saudi - should be encouraged by the potential that Softbank CEO Masayoshi Son sees in Crown Prince Mohammed bin Salman’s modernising drive.

Son is known to have an eye for business with huge potential. On top of founding Softbank and taking it to the highest global echelons, he was an early investor in Alibaba and capitalised on the e-commerce boom decisively.

At an earnings briefing in Tokyo on Monday, Son expressed to commitment to supporting Saudi reforms: “We have also accepted responsibility to the people of Saudi Arabia, an obligation we take quite seriously to help them manage their financial resources and diversify their economy […] we work to help them in their continued efforts to reform and modernise their society”.

Social reforms

The Saudi contribution to technology embodies the Kingdom’s vibrant, young society and growing knowledge economy.

Investment into technology is accelerating social reforms and providing quantifiable evidence that Vision 2030’s promises are being delivered. Investor trust is generated from Crown Prince Mohammed bin Salman’s track-record and reputation as a reforming moderniser.

Saudi investment into technology appeals to the young population, of which 75% is under 35. Even by global standards, Saudi youth are huge consumers of digital services. Investors see an eager, tech savvy population that is ripe for investment.

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Secondly, the Information Revolution is driving momentum in the promise to empower Saudi women. In 2017, the Kingdom saw 144 percent growth in tech firms run by Saudi women. According to Deema al-Yahya, the CEO of MISK Innovation, Saudi women are among the world leaders in STEM (Science Technology Engineering Mathematics).

In March 2018, at the Saudi-UK CEO Forum she said: “64 percent of IT grads in Saudi are females. Of Saudi students, 76 percent are females in STEM […]. Saudi women in tech are not just jobseekers, they are job creators.”

Deema al-Yahya particularly emphasised the empowerment for women in remote parts of the Kingdom: “she has an online retail store and hiring people and selling and creating a consumer boom…that is the digital revolution! And women are at the heart of it!”

Therefore, we can conclude that Saudi investment in technology is not only the driving force for global modernisation and efficiency, but also domestic. Global business should be encouraged by Softbank – and Saudi – success.