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Deep-pocketed, sovereign wealth funds are among the many investors clamoring to get a stake in Anthropic, the red-hot artificial intelligence startup that is taking over OpenAI. One country that is being left out: Saudi Arabia.
As bankers line up a group of potential new Anthropic backers, the corporate has ruled out taking money from the Saudis, based on people conversant in the matter. Anthropic executives cited national security, one of the sources told CNBC.
The stake in Anthropic is on the market since it belongs to FTX, the failed cryptocurrency exchange began by Sam Bankman-Fried, and is being unloaded as part of the corporate’s bankruptcy proceedings. FTX bought the shares three years ago for $500 million. The 8% stake is now value greater than $1 billion because of the recent boom in AI.
Proceeds from the sale shall be used to repay FTX customers. The transaction is ongoing and is on course to wrap up in the following couple weeks, said individuals with knowledge of the talks who asked to not be named since the negotiations are private.
The category B shares, which don’t include voting rights, are being sold at Anthropic’s last valuation of $18.4 billion, sources said. Anthropic has raised roughly $7 billion in the previous few years from tech giants like Amazon, Alphabet and Salesforce. Its large language model competes with OpenAI’s ChatGPT.
Anthropic founders Dario and Daniela Amodei have the suitable to challenge any potential investors, based on the sources. Nevertheless, they are usually not involved in the present fundraising process, or within the discussions with potential investors in FTX’s stake. The founders were introduced to Bankman-Fried through “effective altruism,” a philosophy that involves making as much money as possible to present all of it away.
Saudi Crown Prince and Prime Minister Mohammed bin Salman meets U.S. Secretary of State Antony Blinken (not pictured), in Jeddah, Saudi Arabia March 20, 2024.
Evelyn Hockstein | Reuters
While Anthropic’s founders told bankers they would not accept Saudi money, they do not plan to challenge funding from other sovereign wealth funds, including United Arab Emirates fund Mubadala. The UAE-based firm is actively investing, based on one of the sources.
The potential buyers of FTX’s shares comprise a syndicate of new investors for Anthropic, a source said, meaning Amazon and Alphabet wouldn’t be involved. Part of FTX’s stake is being shopped around through special purpose vehicles, or SPV, which allows multiple investors to pool capital. SPVs have been emailing enterprise firms to solicit participation, three sources said. Investment bank Perella Weinberg is handling the sale on behalf of FTX.
Representatives from Anthropic and Perella Weinberg declined to comment on the sale. Mubadala and Saudi Arabia’s Public Investment Fund, or PIF, didn’t immediately reply to a request for comment.
The PIF, Saudi Arabia’s sovereign wealth fund, has greater than $900 billion in assets and has been plowing capital into technology to diversify the nation’s revenue away from oil. The fund is in talks with enterprise firm Andreessen Horowitz to create a $40 billion fund to take a position in AI, two sources with knowledge of the matter told CNBC. The discussions were first reported by the New York Times.
Saudi Crown Prince Mohammed bin Salman’s ambitious “Vision 2030 Initiative” has looked to modernize the economy and strengthen ties in global finance. The PIF has investments in corporations including Uber, while also funding the LIV golf league and spending heavily in skilled soccer and tennis.
Anthropic’s national security concerns regarding Saudi Arabia might be over dual-use technology — software or tech that will be used for each civilian and military applications. That is an area of notable focus for the Committee on Foreign Investment in the USA (CFIUS), which might block foreign investments from particular sources in certain areas. Saudi Arabia has also been warming to China.
The dominion’s human rights record stays a major problem for some Western partners. Essentially the most notable case lately was the alleged killing of Washington Post journalist Jamal Khashoggi in 2018, an event that triggered international backlash within the business community.
In November, Bankman-Fried was convicted of seven criminal counts tied to the collapse of FTX. His sentencing is scheduled for next week, and prosecutors are recommending a sentence of 40 to 50 years.
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