Saudi Arabia's sovereign wealth fund is finalizing its acquisition of global gaming giant Electronic Arts (EA), with recent filings revealing it will hold 93.4% of the acquired company. This positions the deal as the largest leveraged buyout in history, almost entirely funded by Saudi Arabia alone—a move that has surprised observers, as sovereign wealth funds typically assume minority stakes in traditional acquisitions.
Documents submitted to Brazil's antitrust regulator show the Public Investment Fund (PIF) will inject approximately $29 billion in new capital for the $55 billion transaction (including debt). The fund, alongside tech-focused private equity firm Silver Lake and Jared Kushner's Affinity Partners, announced the acquisition in September last year.
Notably, this massive investment comes as Saudi Arabia faces growing fiscal pressures. The country's 2025 budget deficit is projected to more than double, reaching 5.3% of GDP—the highest level since the 2020 pandemic. Simultaneously, PIF is grappling with funding demands from multiple domestic megaprojects.
The highly concentrated ownership structure underscores Saudi Arabia's substantial financial risk exposure in this deal. This risk is further amplified by PIF's significant investments in both Silver Lake and Affinity funds, creating multilayered vulnerabilities should the EA investment underperform.
**Saudi-Dominated Acquisition Structure**
The buying consortium will commit $36.4 billion in equity and borrow $20 billion in debt. PIF will transfer its existing EA shares—valued at approximately $5.2 billion at acquisition price—into the new structure, requiring about $29 billion in fresh capital to achieve the final 93.4% stake. In contrast, Silver Lake and Affinity Partners will hold 5.5% and 1.1% respectively.
This equity distribution is unusual for leveraged buyouts, where sovereign wealth funds typically participate as minority investors in private equity-led transactions that leverage the latter's dealmaking and operational expertise. Here, PIF bears nearly the entire financial responsibility.
**Mounting Fiscal Pressures**
Despite Saudi Arabia's reputation for deep pockets, the $1 trillion PIF faces strain from domestic commitments including costly megaprojects like the futuristic Neom city and World Cup stadium constructions. In November, PIF disclosed it had divested stakes in over 40 U.S.-listed companies, continuing a sell-off trend since 2021.
The kingdom's broader fiscal position shows vulnerability. With oil prices—its primary revenue source—remaining subdued, this year's budget deficit is forecast to hit 5.3% of GDP. While the IMF notes Saudi Arabia retains substantial foreign reserves and borrowing capacity, and expects 4% economic growth, the deal's scale tests PIF's risk management amid tightening finances.
This transaction signals a strategic shift for sovereign wealth funds from passive asset allocation to active control investments. For EA, near-total ownership by a single sovereign investor means its future strategy will be closely tied to Saudi Arabia's long-term economic vision.
The acquisition marks Saudi Arabia's latest major bet on the gaming-entertainment sector, following heavy investments in professional golf and football leagues, reflecting its ambition to diversify beyond oil. However, the wisdom of such a concentrated investment during fiscal constraints remains a critical question for PIF's oversight capabilities.