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Monday, March 20, 2023

SoftBank, Middle Eastern SWFs Back Mnuchin’s $2.5 Billion Private Equity Fund

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Former Treasury Secretary Steven Mnuchin has found an investor for his new 10-figure private equity fund in an old friend of the Trump Administration: SoftBank.

The latest iteration of SoftBank’s infamous Vision Fund has decided to invest in Mnuchin’s new firm, which has a fundraising target of $2.5 billion, and will feature a private equity model.

Mnuchin’s new Liberty Strategic Capital, which was launched earlier this year, has also raised money from sovereign wealth funds in the Middle East, including Saudi Arabia’s Public Investment Fund.

Ironically, the Saudis were a major backer of SoftBank’s first vision fund, but declined to invest in VFII after VFI single-handedly hiked valuations across the Silicon Valley startup world with massive investments in Uber, WeWork, and other less-well-known firms.

Although it mostly slipped below the radar, Mnuchin’s fund also received an investment from Abu Dhabi’s Mubadala, the giant sovereign wealth fund that saw its reputation tainted by the 1MDB scandal (which briefly led Mubadala to suspend its relationship with Mnuchin’s former employer, Goldman Sachs).

According to the FT, one anonymous source said VFII’s decision to invest with Mnuchin was influenced by Saudi Arabia’s PIF, the state fund administered by Crown Prince Mohammed bin Salman, with whom Mnuchin was said to have a friendly relationship.

Liberty Strategic said: “The firm is not permitted to comment on any ongoing fundraising, but it has a diverse investor base including US insurance companies, family offices, sovereign wealth funds, and other institutional investors.”

Mnuchin had close ties with the US’s Middle Eastern partners during his time as Treasury Secretary, though there were also times of tension, he declined to attend MbS’s “Davos in the Desert” in the wake of the murder of journalist Jamal Khashoggi inside a Saudi consulate in Turkey.

Mnuchin of course joins a long line of Treasury Secretaries (from both parties) who have transitioned to private equity after their time in office. The list includes Timothy Geithner, Hank Paulson, John Snow and Jack Lew

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