Jared Kushner’s new fund plans to invest Saudi money in Israel

Jared Kushner’s new private equity fund plans to invest millions of dollars of Saudi money in Israeli startups, according to people familiar with the investment plan, in a sign of warming ties between two historic rivals.

Affinity Partners, which has raised more than $3 billion, including a $2 billion commitment from the kingdom’s sovereign wealth fund, has already selected the first two Israeli companies to invest in, the people said.

The move marks the first known instance where money from the Saudi Public Investment Fund will be directed to Israel, a sign of the kingdom’s growing willingness to do business with the country, even if it has no diplomatic ties. This could help lay the groundwork for a groundbreaking normalization pact between the two countries.

Israel is deepening its trade and security ties with Arab states, including the United Arab Emirates, nearly two years after the United States brokered landmark normalization agreements. Mr. Kushner, son-in-law of former President Donald Trump and a former senior White House adviser, was instrumental in the so-called Abraham Accords. He has also established close ties with Saudi Crown Prince Mohammed bin Salman, the de facto ruler of the kingdom. Since leaving the White House, Mr. Kushner has tapped into his White House contacts across the Middle East to build his private equity firm, a venture that could earn him lucrative fees, regardless of either the success or failure of its investments.

Meeting in Saudi Arabia in 2017, from left, Prince Mohammed bin Salman, then-President Donald Trump, Jared Kushner and chief economic adviser Gary Cohn.


Photo:

JONATHAN ERNST/REUTERS

As part of negotiations to secure funding for the kingdom, Saudi officials agreed that Affinity Partners could invest in Israeli companies, people familiar with the company’s plans said. The kingdom could also open its economy to Israeli businesses by working with Mr. Kushner, they noted.

In discussions with Saudi leaders, Mr. Kushner and his team warned them that their country could lose access and opportunities in what they called “the Silicon Valley of the Middle East” to neighbors who had signed the Abraham’s agreements with the land, the people said.

In an interview, Kushner said he sees his investment plans as an extension of his White House work to advance ties between Israel and its Arab neighbors, who have long refused to normalize ties with Israel. until its leaders accept the creation of a Palestinian state.

“If we can get Israelis and Muslims in the region to do business together, it will focus people on common interests and shared values,” he said. “We have launched historic regional change that must be strengthened and nurtured to realize its potential.”

Mr. Kushner and his team declined to discuss which companies they work with or how much money is likely to be directed to Israel. Mr. Kushner also declined to discuss his talks with Prince Mohammed, who oversees strategic decisions for the Saudi investment fund. People familiar with the talks said Prince Mohammed should have approved any decision to invest directly in Israel.

A spokesman for the $600 billion Saudi Public Investment Fund, whose board is chaired by Prince Mohammed and includes senior government ministers, declined to comment. The government media office did not respond to requests for comment.

The PIF is tasked with transforming Saudi Arabia’s national economy through investment in new industries and sprawling real estate developments, such as a futuristic $500 billion city-state called Neom. Prince Mohammed told advisers and diplomats that he hoped the Israelis would play an important role in the development of Neom, with potential investments in biotechnology and cybersecurity. In November 2020, the prince met with then-Israeli Prime Minister Benjamin Netanyahu in Neom in a sign that Saudi Arabia may join the Abraham Accords. But new administrations in the United States and Israel have slowed the momentum.

The satellite photo shows the empty desert around where the future city of Neom, Saudi Arabia is planned.


Photo:

Planet Labs PBC/Associated Press

After securing a Saudi investment, Kushner and his team traveled to Israel in March to meet with dozens of Israeli companies seeking financial support from Affinity, according to those involved in the meetings. Mr. Kushner has held meetings with Israeli startups working on everything from health care and agriculture to software and cyber, they said.

“Increasing prosperity in the region and building trade bridges across the region has the ability to cement long-term relationships developed when the Abraham Accords were signed,” said Elie Wurtman, co-founder of PICO Venture Partners. , who helped arrange meetings for Mr. Kushner and his team.

Mr Kushner introduced his investment firm to other oil-rich Arab states, including the United Arab Emirates and Qatar, which is not a party to the Abraham Accords, the Wall Street Journal reported.

Even before the agreements, the United Arab Emirates allowed access to its market to Israeli companies with operations outside other countries. The Persian Gulf state is now able to make direct investments in Israel itself and has struck deals. Abu Dhabi’s Mubadala Investment Co., which manages $250 billion in assets, has invested up to $20 million in six venture capital firms based or targeted in Israel. Another Abu Dhabi sovereign wealth fund, ADQ, led a $105 million investment in Aleph Farms, an Israeli company that produces lab-grown meat.

Lab-grown steak at Aleph Farms, an Israeli company.


Photo:

amir cohen/Reuters

Saudi Arabia is not the only country without diplomatic relations with Israel that Mr. Kushner is courting. Affinity is also looking to bring Israeli technology to Indonesia, the world’s largest Muslim-majority country, according to people familiar with the talks. Prior to leaving the White House, Kushner and his team were working to secure a normalization deal with Indonesia and Israel, but the deal was not finalized before President Biden took office.

Indonesian officials did not respond to requests for comment.

Kushner’s decision to focus his post-government activities on the Middle East has drawn criticism from some Democratic lawmakers who questioned whether Saudi Arabia’s backing was a reward for its unwavering support for Prince Mohammed in the White House. Mr Kushner and the Trump administration backed Prince Mohammed after US intelligence concluded he had approved a plan to kill or capture Jamal Khashoggi, a Saudi Washington Post columnist who was killed by a team Saudi Arabia in Istanbul in 2018. Prince Mohammed denied ordering the operation.

Affinity said it was proud of its partnership with the Saudi fund and dismissed suggestions it was linked in any way to Mr Kushner’s support of Prince Mohammed while working in the White House.

Affinity faces investor competition for Israel’s top startups. A glut of global capital has led to a boom in the Israeli tech scene in recent years, with 2021 a record year for fundraising, although the market cooled in the first quarter of this year.

Ayelet Frish, an Israeli strategic adviser and branding expert who has helped organize meetings for Affinity, said Kushner’s speech resonated with many companies.

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“Jared Kushner can open doors for you,” said Frish, who served as chief strategic adviser to late Israeli President Shimon Peres. “He can open doors for Israeli businesses even in countries where we don’t have real connections, like Saudi Arabia and Indonesia.”

Kushner said the prospect of normalizing relations between Saudi Arabia and Israel would be accelerated by deepening economic ties.

“The more we can build business ties and introduce the region’s innovators to each other, the more we empower those who want to take this new path while weakening those stuck in the old paradigm,” Kushner added. .

Write to Dion Nissenbaum at [email protected] and Rory Jones at [email protected]

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