Softbank Group has appointed Deutsche Bank to advise on its plans to invest in the electricity sector in the Kingdom of Saudi Arabia, two sources have said.
The Japanese group, which plans to invest in a huge solar power plant in the Kingdom, also showed interest in distributing electricity to a world oil exporter, sources said.
The source said Softbank could consider purchasing a minority stake in Saudi electricity distribution from the Public Investment Fund, a sovereign wealth fund.
"They want to become a minority shareholder with influence," the source said.
The Public Investment Fund has 74% stake in the Saudi Electric Company. Saudi Aramco is the second major contributor, with 7% of the share.
Softbank refused to comment. The Public Investment Fund and Deutsche Bank also refuse to comment, while the Saudi Electric Company did not respond to Reuters's request for comment.
In March, Executive Director Softbank Masaioshi Son said he signed an agreement to establish the world's largest solar energy production company in Saudi Arabia, which will have a production capacity of 200 gigawatts by 2030.
The third report states that further details of the project were expected in the first quarter of next year.
Sun defended Softbank's relationship with Saudi Arabia following a global protest over the killing of Saudi journalist Jamal Hashoggy at his consulate in Istanbul last month, saying his company was responsible for Saudi Arabia's citizens whose money was invested in their Vision Fund.
Saudi Arabia secured about half the $ 93 billion Softbank launched for the fund. The Fund has become one of the main funds for financing technology companies around the world.
Saudi Arabia suppresses economic transition and reduces reliance on oil. The Kingdom observes solar energy as a way to reduce the amount of raw material it uses to produce electricity at home and increase exports abroad.
The government also wants to privatize the Saudi power company as part of wider reforms in the energy sector. The government plans to divide the largest utility company in the Gulf region into separate companies that will be offered to citizens through initial public offers or domestic and international partners.
But the plan was delayed because the kingdom reviewed energy subsidies to reduce domestic consumption and reduce waste.
The state says it will gradually increase energy prices by 2020, which will help the company achieve a more sustainable financial model.
To cover the growing demand, Saudi electricity has had to increase capital spending through borrowing. The company's debt is more than 160 billion riyals ($ 42.7 billion), of which almost half of commercial loans.