A hedge fund has told investors it returned money to Saudi Arabia following the murder of columnist Jamal Khashoggi, according to people with knowledge of the matter.
The move is a rebuke to Saudi Arabia, one of the world’s most influential investors.
Pharo Management (UK) LLP in December gave back about $300mn that it had previously managed for the kingdom’s central bank Saudi Arabian Monetary Authority, known as SAMA, one of the people said, asking not to be identified because the information is confidential.
Guillaume Fonkenell, 54, who founded Pharo, told some investors in January that the decision was made to uphold its principles due to concerns about Khashoggi’s death at the hands of government agents last year, the person said.
The move highlights lingering disquiet about the Saudi’s human rights record under Crown Prince Mohammed bin Salman, whose plans for economic redevelopment have been overshadowed by allegations since October that he engineered the writer’s brutal killing in the kingdom’s Istanbul consulate.
Saudi authorities deny the prince played any role in Khashoggi’s death.
A spokesman for Pharo, which managed $9.7bn at the end of January, declined to comment. A representative for SAMA, which acts as the custodian of the kingdom’s foreign reserves, didn’t respond to several calls and emailed requests for comment.
Saudi Arabia’s state-owned investment firms - eager to generate returns that will help offset the impact of depressed crude prices on the oil-rich economy - are one of the biggest sources of capital for asset managers globally. Top financiers including JPMorgan Chase & Co’s Jamie Dimon, BlackRock Inc’s Larry Fink and Winton Group founder David Harding pulled out of the prince’s flagship investment event in October with less-senior executives participating in the conference.
Fink, who runs the world’s largest asset manager, said in November, however, that he expects to continue to invest in the country.
Meanwhile, more companies have attempted to penalise Saudi Arabia following Khashoggi’s death and dismembering.
British billionaire Richard Branson suspended talks with Saudi Arabia’s Public Investment Fund shortly after the initial media reports about the columnist’s disappearance, calling it a potential game-changer for companies doing business with Saudi Arabia. The sovereign wealth fund had committed to investing $1bn in space companies controlled by Branson’s Virgin Group.
Talent agency Endeavor also sought to terminate a deal to sell a $400mn stake to the PIF.
Pharo is potentially the first hedge fund to go to the extent of refusing to manage money for the country. The decision comes at a time when the $3tn-industry finds itself engulfed in a fierce battle to attract capital as investors revolt against high fees and mediocre returns. Clients pulled out $37.2bn from hedge funds in 2018, according to eVestment data.
The PIF, the most well-known of Saudi Arabia’s sovereign wealth funds, has made a series of investments in companies such as Tesla Inc and Uber Technologies Inc, as well as a $45bn commitment to SoftBank Group Corp’s Vision Fund.
Until recently, Saudi Arabia invested the bulk of its surplus through the central bank. Net foreign assets held by SAMA were over 1.8tn riyals ($480bn) in
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