The Kingdom of Saudi Arabia has placed a bet on a Carnival Corp resurgence, having taken a multimillion-dollar position in the world's largest cruise company.
Its Public Investment Fund has snapped up 4.35 million shares equal to 8.2% of the ailing company, worth around $420m. Carnival shares were trading up over 20% at $10.42 through late morning on Wall Street today.
Carnival, which dominates the sector with 104 ships, has seen its stock plummet 81% since 1 January, amid Covid-19 outbreaks on board and cancelled voyages.
Last year, Carnival shares reached $52 valuing the group at over $27bn. Its market capitalisation is now just $6.4bn.
Diversification
The Public Investment Fund is Crown Prince Mohammed bin Salman’s vehicle to boost Saudi investments at home and abroad, as he seeks to diversify the oil-heavy economy.
It gained around $30bn from December's listing of oil giant Saudi Aramco, adding to the $320bn in assets it previously controlled.
In addition to funds allocated to Softbank and Blackstone, it has investments in Uber, and earlier this year held talks about buying British football club Newcastle United.
Finance lifeline
The company last week issued 62.5 million shares in a scrambling effort to shore up billions in losses also seen by competitors Royal Caribbean Cruises and Norwegian Cruise Line Holdings.
All three majors have suspended their fleets into May, taking almost 200 ships off the careening cruise market.
Carnival's fleet stoppage alone is costing the company $1bn a month in layup expenses, cruise refunds and interest on new debt that has escalated quickly to $6bn and counting.
Other cruise outfits have dropped anchor on their assets as well, making for a once-booming sector that has essentially come to a screeching halt in a matter of weeks.
