ARM owner SoftBank to create $100bn tech fund with Saudi sovereign investment

SoftBank says it will find another $25bn to invest in high tech - but where will it get the money?

SoftBank, the Japanese company that completed the £24.3bn acquisition of UK chip designer ARM just last month, is teaming up with the Saudi government's sovereign wealth fund to create a $100bn technology investment fund.

The highly leveraged company "expects to invest at least $25bn" over the next five years in the SoftBank Vision Fund, while the Public Investment Fund of the Kingdom of Saudi Arabia will invest up to $45bn over the same period. A number of other "large global investors" may also join the fund, according to SoftBank.

"With the establishment of the SoftBank Vision Fund, we will be able to step up investments in technology companies globally. Over the next decade, the SoftBank Vision Fund will be the biggest investor in the technology sector. We will further accelerate the information revolution by contributing to its development," said SoftBank chairman and CEO Mayayoshi Son.

Saudi Arabia's participation in the fund is intended to provide an income stream for the country, funded by revenues from the country's oil, that will enable it to maintain its prosperity if or when the world shifts away from oil.

It is one of a number of recent shifts by the country's government, especially in the direction of technology sector and new dot com investments. In June, the country's Public Investment Fund purchased a $3.5bn stake in cab-hailing company Uber.

The country's government is aiming to boost the value of investments made by its sovereign wealth fund from $160bn to $2tn.

However, it is not clear whether this will be financed entirely from oil revenues - which are already diverted to current expenditure by the government, which has been running a vast deficit since the crash in the price of oil - or whether it will resort to borrowing at current low, global interest rates.