A trio of Middle Eastern funds have agreed to stump up $24 billion to help bankroll Paramount Skydance Corp.’s bid for Warner Bros. Discovery Inc. The region’s exposure to the deal is likely larger, once its deep ties to private equity firms behind the bid are factored in.
Saudi Arabia’s Public Investment Fund and the Qatar Investment Authority joined the relatively-unknown Abu Dhabi firm L’imad Holding Co. to bankroll the hostile offer earlier this week. The funds are overseen by wealthy Gulf states that have long supplied large amounts of capital to global buyout firms.
One example is Apollo Global Management Inc., which is among firms providing as much as $54 billion of financing for the Paramount offer. Abu Dhabi’s Mubadala Investment Co. has a long-standing relationship with Apollo, and the PIF’s venture arm has invested in funds run by the US firm.
The Saudi wealth fund, alongside the QIA and Abu Dhabi’s Lunate, has also steered billions of dollars into Affinity Partners. Jared Kushner’s firm has ties to Mubadala too, after jointly investing in a Brazil-based fast-food firm alongside a unit of the Emirati entity.
Their play for Warner Bros. comes just months after the PIF partnered with Affinity on another eye-catching bid, a $55 billion buyout of Electronic Arts Inc. Kushner connected the two sides, and played a central role in the talks, Bloomberg News reported at that time.
This time around, prominent figures involved also include Larry Ellison, the billionaire with close ties to the region. The Gulf investors plan to provide capital through non-voting equity investments and have agreed to forgo any governance rights, which would help ensure bid wouldn’t need approval from the Committee on Foreign Investment in the US.
The Middle East’s latest attempt reinforces a years-long trend that’s seen regional entities emerge as bankers to the world. Collectively, five wealth funds controlled by Abu Dhabi, Qatar and Saudi Arabia deployed $82 billion last year, accounting for more than 60% of all sovereign wealth fund investments, according to Global SWF.
That cash has propped up transactions across sectors ranging from finance to artificial intelligence as governments seek to build new engines of growth beyond oil.
An acquisition of Warner Bros. will add another element: extending soft power. If the transaction materializes, Middle Eastern investors could gain a stake in marquee assets including Warner Bros. TV and film studios, the HBO business and cable channels, including CNN.
That prospect ultimately brought funds from the United Arab Emirates, Saudi Arabia and Qatar together on one transaction for the first time in years. The countries control just over $3 trillion in sovereign wealth, and deals involving all three are unusual.
“This means that either the deal is too good to pass, or there is a third party — say Affinity Partners — putting them together,” said Diego Lopez, founder and managing director at Global SWF, which tracks wealth funds.