• Pharo Management, a UK-based hedge fund told investors that it returned $300 million to Saudi Arabia – a rare rebuke to the oil giant, according to a Bloomberg report.
  • The decision was made in response to the October killing of the journalist Jamal Khashoggi that has been linked to the Saudi state.
  • Pharo managed the funds on behalf of the kingdom’s central bank, the Saudi Arabian Monetary Authority.

UK hedge fund Pharo Management told its investors that it returned $300 million of Saudi Arabian money following the murder of the journalist Jamal Khashoggi.

Pharo, which controls about $9.7 billion, managed the money on behalf of the kingdom’s central bank, the Saudi Arabian Monetary Authority (SAMA). The move is a major call during a tricky period in which funds are struggling for capital. The fund’s founder, Guillaume Fonkenell, says the decision was based on principles, following Khashoggi’s murder last October which has been linked to the Saudi state, according to Bloomberg.

It underlines some broader concerns from the Western world about Saudi Arabia’s human-rights record, extending beyond Khashoggi’s murder, which caused an international outcry last year.

It’s also not the first time in recent memory that a hedge fund has decided to focus on principles. Earlier this month, Hildene Capital Management pulled funds from Purdue Pharma, the brand known for producing Oxycontin, according to the Wall Street Journal. The Sackler family, which controls Purdue, has been under increasing pressure over its ties to the opioid epidemic in the US.

However, investors haven't been particularly bothered by Saudi Arabia from a reputational risk perspective en masse. The kingdom's first major sovereign bond issuance of 2019 was well received, and Larry Fink, the CEO of BlackRock, the world's largest asset manager, said he was not "ashamed" to work with Saudi Arabia.

Pharo declined to comment. A representative for SAMA didn't immediately respond to emailed requests for comment.