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Saudi Arabia’s Lenovo Deal Showcases Cash for Investments Strategy

(Bloomberg) — Saudi Arabia’s plan to invest $2 billion in Lenovo Group Ltd. is the latest example of a strategy to use the kingdom’s cash pile to lure foreign companies and become the Gulf’s tech hub.

Alat, a unit of the powerful Saudi sovereign wealth fund, said early on Wednesday that it would invest in a Lenovo convertible bond. In return, the Chinese computer-maker pledged to open a manufacturing facility and establish a regional headquarters in Saudi Arabia. The kingdom said it expects its investment to create 15,000 direct jobs locally, and add $10 billion to gross domestic product by 2030.

Attracting foreign investment has become a key focus for the country under Crown Prince Mohammed Bin Salman and his plan to diversify the oil-dependent economy. It’s also part of an unfolding rivalry with the neighboring United Arab Emirates to dominate the tech industry in the region, a race that also includes data centers and artificial intelligence.

Read More: Saudi Arabia, UAE Rush to Build Data Centers in Race to Win AI

Saudi Arabia’s $1 trillion Public Investment Fund, which has become a prominent tech investor in recent years, is increasingly using its heft to require foreign companies to invest in Saudi Arabia in return.

With $100 billion to spend, the PIF’s Alat unit looks set to become a powerful force to further these goals. It can offer money to firms willing to help its ambitions to make Saudi Arabia a powerhouse in electronics manufacturing. Earlier this year, it announced a string of deals, including partnerships with SoftBank Group Corp. and a Chinese surveillance equipment maker to set up local manufacturing facilities.

The UAE has struck its own deals, winning an investment from Microsoft Corp. for state-backed Abu Dhabi AI startup G42 last month.

Read More: Middle East’s Emerging AI Powerhouse G42 Chooses US Over China

Saudi cash has already been put to work disrupting in other industries.

A deal to give BlackRock Inc. $5 billion earlier this year was predicated on the US asset manager building a Riyadh-based team to manage it and invest it in the Middle East. An earlier investment in electric carmaker Lucid Group Inc. led to the company opening a plant on Saudi Arabia’s west coast.

(Updates with additional details throughout)

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Read More: Saudi Arabia’s Lenovo Deal Showcases Cash for Investments Strategy

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