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

Anthropic, the AI startup, has made it clear that it will not entertain investments from Saudi Arabia in the sale of 8% of its shares, a part of FTX’s bankruptcy proceedings.

According to CNBC reports, executives at Anthropic have cited concerns as the primary reason for excluding Saudi Arabian involvement.

The stake, acquired by Bankman-Fried three years ago for $500 million, has seen a significant increase in value, now exceeding $1 billion, owing to the recent surge of interest in AI technologies.

Proceeds from the stake sale will go towards repaying FTX customers, with the transaction expected to be finalized within the coming weeks, as per insiders speaking on condition of anonymity due to the sensitive nature of negotiations.

Sources indicate that the class B shares, devoid of voting rights, are being sold based on Anthropic’s latest valuation of $18.4 billion.

Over the past few years, Anthropic has secured around $7 billion in funding from tech giants like Amazon, Alphabet, and Salesforce. Their sophisticated language model presents direct competition to OpenAI’s ChatGPT.

Although founders Dario and Daniela Amodei maintain the authority to scrutinize potential investors, they are presently not engaged in the fundraising efforts or negotiations related to FTX’s stake.

The Amodei siblings were initially connected with Bankman-Fried through the philosophy of “effective altruism,” which revolves around optimizing resources to support charitable endeavors.

UAE Considering Investing in Anthropic

While Anthropic has made it clear that it won’t accept investments from Saudi Arabia, it doesn’t intend to oppose funding from other sovereign wealth funds, including the United Arab Emirates’ Mubadala.

Sources suggest that Mubadala, headquartered in the UAE, is actively contemplating an investment in Anthropic.

The potential buyers for FTX’s shares comprise a syndicate of new investors for Anthropic, with Amazon and Alphabet excluded from the mix.

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

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

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

Saudi Arabia’s Sovereign Wealth Fund Invests in Tech

Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), boasting assets surpassing $900 billion, has been actively pursuing technology investments to diversify the nation’s revenue streams beyond oil.

According to sources familiar with the matter cited by CNBC, the fund is engaged in discussions with venture firm Andreessen Horowitz to establish a $40 billion fund dedicated to AI investments.

Under the ambitious “Vision 2030 Initiative” led by Saudi Crown Prince Mohammed bin Salman, the nation aims to modernize its economy and bolster global financial connections.

PIF’s investment portfolio includes stakes in companies like Uber and backing for the LIV golf league, alongside substantial commitments to professional soccer and tennis.

Anthropic’s apprehensions regarding national security vis-à-vis Saudi Arabia may stem from concerns over dual-use technology, which denotes software or technology with potential applications in both civilian and military domains.

This concern area resonates with the scope of the Committee on Foreign Investment in the United States (CFIUS), which holds the authority to obstruct foreign investments from specific origins within certain sectors.

It’s noteworthy that Saudi Arabia has been forging closer connections with China as well.

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

His sentencing is slated for next week, with prosecutors recommending a term of 40 to 50 years.

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