Saudi Arabia’s wealth fund parts ways with three executives

Saudi Arabia’s Public Investment Fund has parted ways with at least three senior investment executives in recent months, in what may be a blow to the sovereign wealth fund’s ambitions to expand into a global giant.

Chief strategy officer Dennis Johnson, who had been in his role since 2018, has left, as well as the head of risk, Martin Botha, according to people with knowledge of the matter.

Head of investment risk, Hassan Chehime, who had been with the PIF for about a year, also departed, the people said, asking not to be identified because the moves haven’t been publicly disclosed.

The $320bn sovereign wealth fund, run by Governor Yasir Al-Rumayyan and controlled by Crown Prince Mohammed bin Salman, has been building out its bench of global and local managers as it steps up deal-making in a bid to become the world’s biggest. The departures risk stymieing those efforts as Saudi Arabia is counting on its global investments to help wean the kingdom away from its dependence on oil.

Johnson is the fund’s second head of strategy to leave in two years. Eric Ebermeyer left in 2018, just weeks after joining. Botha was one of the fund’s first senior hires in 2016.

The PIF has expanded from having “40 employees in 2016 to nearly 700 today, with plans to expand to more than 1,000 by year end,” it said in a statement.

Staff turnover is “exceptionally low and is well below both industry and MENA region averages.”

Since late last year, the fund has hired “approximately 15 senior executives” who are “a mix of top-tier leaders from both Saudi Arabia and international business centers,” it said.

Jerry Todd, former head of business development at Riyadh-based investment bank NCB Capital, was recruited in a senior role to help run its strategy.

Botha said he left for personal reasons, while Chehime and Johnson couldn’t be reached for comment.

Governance
Some executives say the PIF lacks the governance and controls that are expected in a fund of its size. A lack of analysis and consultation in making decisions has contributed to turnover at the fund, where the crown prince exerts considerable control in choosing investments.

High-profile investments in Uber Technologies Inc. and SoftBank Group’s Vision Fund came after Prince Mohammed personally met with top leaders at the firms.

“The PIF has put in place a world class governance framework around all of its investments based on global best practice, ensuring robust risk management and extensive institutional expertise,” the fund said.

“Our investment strategy goals and aims are well documented and adhere to the most stringent of governance policies.”

The PIF has made a series of significant investments in recent years, with a mixed track record. It paid almost $49 a share for a stake in Uber Technologies Inc. in 2017, a level the company hasn’t reached since.

It also built a roughly $2bn stake in Elon Musk’s Tesla Inc. in 2018 and sold almost all of the shares toward the end of 2019, missing out on an almost 80 per cent rally this year. It also made a $45bn commitment to SoftBank’s Vision Fund.

The Wall Street Journal revealed details of a close relationship between 49-year-old Al-Rumayyan and Carla DiBello, who’s advising on the PIF’s proposed acquisition of Premier League soccer team Newcastle United. Their relationship has raised concerns among some PIF officials, the newspaper reported last month.

In response to the article, the PIF told the newspaper that the account of DiBello’s role was “mis-representing of facts” but didn’t detail what the WSJ had misrepresented.

The PIF told the newspaper DiBello isn’t an adviser and isn’t paid by the fund.