Saudi Arabia's sovereign wealth fund, the Public Investment Fund (PIF), is reportedly in talks to invest a minimum of $250 million in Human Horizons Group Inc., a Chinese electric vehicle (EV) manufacturer. This investment is part of Saudi Arabia's ongoing efforts to develop a domestic auto industry. The PIF is considering acquiring a stake in Human Horizons at a valuation of $3 billion, although the terms of the deal are still being finalized. A final agreement may be reached in the coming months, but no decisions have been made yet.
Human Horizons, based in Shanghai, has been exploring strategic options to fuel its growth and may raise up to $1 billion from private investors. The company has also been working with UBS Group AG and Morgan Stanley on the potential for an initial public offering (IPO).
If the investment proceeds, it would be one amongst many recent deals in the auto sector facilitated by Saudi Arabia. The kingdom has been actively diversifying its economy away from reliance on oil. In addition, Saudi Arabia has recently approved plans for its own EV brand, Ceer, and has established manufacturing partnerships with companies like Lucid Group Inc. and Hyundai Motor Co.
This potential investment by the PIF not only signifies Saudi Arabia's commitment to building its domestic auto industry but also indicates the strengthening ties between the kingdom and China, as the latter is Saudi Arabia's largest trading partner. Since President Xi Jinping's visit to Saudi Arabia in December, Chinese businesses have shown a growing interest in Gulf investments and potential involvement in Saudi Arabia's Vision 2030, an economic transformation plan.
Chinese EV manufacturers have been steadily attracting investments as they expand their presence in international markets. Companies like BYD, Nio Inc., SAIC Motor Corp., and Xpeng Inc. are making significant strides in Asia, South America, and Europe. In July, Volkswagen AG agreed to acquire a $700 million stake in Xpeng Inc., while Stellantis NV signed a $1.1 billion deal with Chinese EV maker Zhejiang Leapmotor Technology Ltd. These investments highlight the growing global appeal and competitiveness of Chinese EV manufacturers.
Overall, this potential investment by the PIF in Human Horizons Group Inc. represents Saudi Arabia's commitment to developing its own auto industry while strengthening economic cooperation with China. It also reflects the rising prominence of Chinese EV manufacturers in the global market as they expand their reach and attract substantial investment.