Splashing out $29 billion! Saudi Arabia almost "completely bought" EA

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Saudi Arabia's sovereign wealth fund is finalizing its acquisition of the globally renowned video game company Electronic Arts (EA). The latest documents show that it will acquire 93.4% of the company’s shares, meaning this largest-ever leveraged buyout is almost entirely funded by Saudi Arabia alone. This move is surprising, as sovereign wealth funds traditionally only play a minority shareholder role in acquisition deals.

According to documents submitted to Brazil’s antitrust regulator, the Saudi Public Investment Fund (PIF) will need to inject approximately $29 billion in new capital for the deal, which has a total value of $55 billion including debt. The fund, together with the technology-focused private equity firm Silver Lake and Jared Kushner’s Affinity Partners, announced the acquisition last September.

Notably, this enormous investment comes amid increasing fiscal strain in Saudi Arabia. The country’s budget deficit for 2025 is expected to more than double, reaching 5.3% of GDP, its highest level since the 2020 pandemic. At the same time, PIF is facing financial pressure from numerous major domestic projects.

This highly concentrated shareholding structure underscores the significant financial risks Saudi Arabia is taking on in this deal, especially considering that the fund is also a major investor in both Silver Lake and Affinity, further increasing its exposure should the investment fail.

Saudi-Led Acquisition Structure

For this deal, the acquisition consortium will inject $36.4 billion in equity and borrow $20 billion in debt. PIF will transfer its existing EA shares, worth about $5.2 billion at the deal price, into the new structure, which means the fund needs to inject approximately $29 billion of new capital to reach a final holding of 93.4%. By contrast, Silver Lake and Affinity Partners will hold 5.5% and 1.1% of shares, respectively.

This kind of equity distribution is uncommon in the leveraged buyout sector. Typically, sovereign wealth funds participate as minority investors in private equity-led deals, as private equity firms have more professional expertise in deal execution and management of newly acquired businesses. But in this case, PIF is essentially assuming almost all the financial responsibility.

It’s worth noting that PIF is also a major investor in both Silver Lake and Affinity funds, meaning that if the EA investment encounters issues, the fund will face multi-layered financial risks.

Mounting Fiscal Pressure

Although Saudi Arabia is known for its abundant funds, the $1 trillion PIF is being stretched thin by numerous domestic commitments. These include costly mega-projects, such as the futuristic Neom city and new stadiums built for the World Cup.

Last November, PIF disclosed that it had sold shares in more than 40 U.S.-listed companies, continuing a trend of divestment since 2021.

Saudi Arabia’s overall fiscal situation is also becoming increasingly fragile. This year, the budget deficit is expected to soar to 5.3% of GDP, the highest since the 2020 pandemic. According to data from the International Monetary Fund, Saudi Arabia still holds hundreds of billions of dollars in foreign exchange reserves and has further room for borrowing, and the economy is expected to grow at a relatively fast rate of 4%. However, persistently low oil prices—its main revenue source—are weakening its fiscal cushion.

The scale and structure of this deal are symbolic for the global private equity market. It marks sovereign wealth funds shifting from a traditional passive allocation role to a more proactive, controlling investment strategy. For EA, being almost entirely owned by a single sovereign investor means its future strategy will be closely aligned with Saudi Arabia’s long-term economic vision.

This represents yet another major bet by Saudi Arabia in the gaming and entertainment sector, following its large investments in professional golf and football leagues, reflecting its ambition to diversify investments and lessen dependency on oil revenues. But against a backdrop of mounting fiscal pressure, whether such a large single investment is wise will test PIF’s risk management capabilities.

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