After splurging on EA, Saudi Arabia’s Public Investment Fund is reportedly tightening its pursestrings, due to ‘financial distress’ caused by numerous troubled projects

Over the last few years Saudi Arabia’s Public Investment Fund has become a significant presence in the games industry. It’s the owner of Monopoly Go creators Savvy Games Group, has stakes in Nintendo, Embracer Group, Capcom, and Take-Two, among many others,and most recently was involved in the $55 billion joint acquisition of Electronic Arts.

But all that spending may be catching up with the PIF, as a new report suggests that it is running low on cash for further investments. According to the New York Times (via GamesIndustry) the PIF is restricting operations under the eye of Crown Prince Mohammed, as numerous projects it has invested in are under “financial distress”.

It’s worth noting that none of these distressed investments are directly related to gaming. Troubled projects include Saudi Arabia’s ambitious (some may say preposterous) city construction project Neom, with its plans for a 105 mile, glass-walled city called “The Line” being massively scaled back. Other struggling investments cited by the NYT include a coffee chain with just one shop, a cruise line with one lonely ship, and “an electric vehicle start-up begun three years ago that has yet to deliver a car.”

The PIF’s total investment value apparently stands at almost $1 trillion in assets, but many of these are “hard to sell,” with no available public valuations. While a spokesman for the PIF, Marwan Bakrali, said the fund is still “very liquid by regional standards” with $60 billion in cash, six other people told the NYT that the fund’s representatives have communicated to international investors that it is virtually unable to allocate any additional money “for the foreseeable future”.

The PIF’s board is apparently looking to make more conventional investments in future, such as publicly traded stocks and bonds. But its acquisition of EA, in conjunction with Silver Lake and Affinity Partners, represents a continuation of its existing strategy. It was the PIF’s largest investment of the autumn, and represented the largest leveraged buyout in private equity history.

This has resulted in concerns that EA’s buyers might cannibalise the company for short-term profit, squeezing EA hard in the short-term to yield high but unsustainable rewards, or just liquidate the company’s assets outright. EA’s CEO has tried to reassure everyone that it’s business as usual, but the PIF’s seemingly precarious financial position is not exactly reassuring.

It certainly wouldn’t be the first time that private equity has wreaked havoc on the games industry. Embracer Group’s notorious failure to secure a major deal following a frantic acquisition spree sent shockwaves through the games industry that are still being felt, resulting in thousands of layoffs, the closure of multiple studios including Volition, Piranha Bytes and Pieces Interactive, the selloff of Gearbox and the reported cancellation of projects like a new Deus Ex.