Saudi Investors Barred from FTX’s Anthropic Stake Sale Over National Security Concerns

AI startup Anthropic will not accept investments from Saudi Arabia in the sale process of 8% of its shares as part of FTX’s bankruptcy proceedings.

Executives at Anthropic have cited these concerns as the reason for ruling out Saudi Arabian involvement, as reported by CNBC.

Bankman-Fried, acquired the stake three years ago for $500 million. Thanks to the recent surge of interest in AI technologies, the value of the 8% stake has now exceeded $1 billion.

The proceeds from the stake sale will be used to repay FTX customers, and the transaction is expected to conclude within the next few weeks, according to insiders who have requested anonymity due to the confidential nature of the negotiations.

Sources reveal that the class B shares, which do not grant voting rights, are being sold based on Anthropic’s most recent valuation of $18.4 billion.

In recent years, Anthropic has raised approximately $7 billion from tech giants such as Amazon, Alphabet, and Salesforce. 

The company’s advanced language model directly competes with OpenAI’s ChatGPT.

While founders Dario and Daniela Amodei retain the right to challenge potential investors, they are currently not involved in the fundraising process or discussions regarding FTX’s stake. 

The Amodei siblings were introduced to Bankman-Fried through the concept of “effective altruism,” which involves maximizing wealth for charitable causes.

AI startup Anthropic strategically excludes Saudi investors in FTX stake sale due to security concerns, valuing Anthropic at $18.4 billion. Complex negotiations underway. Geopolitical factors shaping AI investment landscape.

— Kelvin Zinck (@KelvinZinck) March 23, 2024

UAE Considering Investing in Anthropic

Although Anthropic has explicitly stated its refusal to accept Saudi Arabian investments, it does not plan to challenge funding from other sovereign wealth funds, including the United Arab Emirates’ Mubadala. 

According to one source, Mubadala, based in the UAE, is actively considering an investment in Anthropic.

The potential buyers for FTX’s shares consist of a syndicate of new investors for Anthropic, excluding Amazon and Alphabet. 

FTX’s stake is being marketed through special purpose vehicles (SPVs), which allow multiple investors to pool their capital. 

Venture firms have received emails from SPVs soliciting participation in the sale, according to three sources. 

Perella Weinberg, an investment bank, is managing the sale on behalf of FTX.

Saudi Arabia’s Sovereign Wealth Fund Invests in Tech

PIF, Saudi Arabia’s sovereign wealth fund with assets exceeding $900 billion, has been heavily investing in technology to diversify the nation’s revenue sources away from oil. 

The fund is reportedly in discussions with venture firm Andreessen Horowitz to create a $40 billion fund dedicated to AI investments, as reported by CNBC based on sources familiar with the matter.

Saudi Crown Prince Mohammed bin Salman’s ambitious “Vision 2030 Initiative” aims to modernize the economy and strengthen global financial ties. 

PIF has made investments in companies such as Uber and has also funded the LIV golf league while making significant commitments to professional soccer and tennis.

Anthropic’s national security concerns regarding Saudi Arabia may be related to dual-use technology, which refers to software or tech that can have both civilian and military applications. 

This area of concern aligns with the focus of the Committee on Foreign Investment in the United States (CFIUS), which has the authority to block foreign investments from specific sources in certain sectors. 

It is worth noting that Saudi Arabia has also been cultivating closer ties with China.

In November, Sam Bankman-Fried, the founder of FTX, was convicted on seven criminal counts related to the collapse of the exchange. 

His sentencing is scheduled for next week, and prosecutors are recommending a sentence of 40 to 50 years.