Finance

PIF slashes Starbucks stake as it cuts US stocks by $15bn

May 17, 2024, 2:19 PM

PIF's Starbucks shareholdings were cut almost by half from 6.3 million shares to 3.8 million

Saudi Arabia fund drops 25 companies
Reduces stakes in Amazon and PayPal
Sales could fund giga-projects

Saudi Arabia’s Public Investment Fund (PIF) has slashed its US equity holdings by 42 percent to $20.6 billion, including its stake in Starbucks, the global coffee chain that has suffered calls for a boycott as a result of the Gaza conflict.

The latest US government data highlights funding challenges facing the Saudi giga-projects.

The filing to the US Securities and Exchange Commission on May 15 showed holdings at $20.55 billion on March 31, down more than $15 billion from $35.24 billion on December 31.

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PIF divested itself of 25 companies, including a $602 million stake in the asset manager Blackrock and a $942 million stake in the cruise operator Carnival.

It also reduced its shareholdings in a number of tech stocks including Amazon, Microsoft, Salesforce and PayPal.

Its holding in Starbucks was cut almost by half, from 6.3 million shares to 3.8 million, bringing in $282 million.

The coffee shop giant is one of a number of US brands whose sales have suffered in the Middle East due to the Gaza conflict.

Free float stock price shifts meant the value of unchanged shareholding volume fell in the EV vehicle maker Lucid, down $1.9 billion to $3.9 billion, and rose in Uber by $1.1 billion to $5.6 billion.

PIF also took positions in three tech companies: Arm, Nu Holdings and Nvidia.

James Swanston of Capital Economics said PIF’s selling could have been driven by higher share prices, so it was not clear if the sovereign wealth fund had acted to help its funding of Saudi Arabia’s massive economic transformation plan, its key remit.

However, he said: “It does appear there has been, or is currently ongoing, an internal reassessment of how much can be devoted to [giga-projects].”

The Saudi sports and leisure city Qiddiya said this week that it would absorb the entertainment company Seven, in the first sign of a possible shake-up of Public Investment Fund giga-projects as they struggle to meet deadlines against a background of rising costs and budget deficits.

Doubts have arisen about the future of some of the projects after the government said in December that some could be subject to delays and Neom revealed in March that its 170km-long horizontal city The Line would open in 2030 at less than 5km.