Jared Kushner’s Deal-Making Career Off to Sluggish Start
Trump’s son-in-law has drawn scrutiny after his firm attracted billions in investments from Gulf nations
By Dion Nissenbaum and Summer Said
Updated Aug. 18, 2023 12:00 am ET
Jared Kushner set up last year at Tel Aviv’s Hilton Hotel overlooking the Mediterranean Sea, aiming to spend some of the $3 billion that Gulf nations had pledged for him to invest.
For five days, Kushner and his team at Affinity Partners listened to pitches from promising Israeli companies hoping to secure funding from the former White House senior adviser, who is also former President Donald Trump’s son-in-law.
Kushner had raised the money from Saudi, Emirati and Qatari investors, after presenting himself as a unique business leader able to bridge the region’s economic and cultural divides. To that end, he had secured unique approval from Saudi Crown Prince Mohammed bin Salman to invest the kingdom’s money in the Jewish nation for the first time.
Kushner left Tel Aviv last spring without writing any checks.
More than a year later, while collecting millions in management fees, Kushner says he is just now poised to invest in his first Israeli company.
Kushner admits that he has been slow to sign deals and sees that as savvy business sense. Affinity opened its doors in the midst of an overheated investment market, especially in Israel, with dozens of aspiring companies vying for Kushner’s attention. Then the market crashed and business confidence in Israel took a beating amid the country’s political fight over polarizing changes to the judicial system that helped drive private funding in Israeli startups to a five-year low in the first half of 2023, according to the Israeli nonprofit Start-Up Nation Central.
The global market for investing in startups has been similarly brutal, with valuations for once-hot startups cratering.
“Deployment has been slower than expected because we maintained high standards,” Kushner said. “In retrospect, I’m glad we didn’t follow the herd.”
Kushner’s post-White House work has drawn scrutiny from some in Congress who question whether the business arrangement is a Saudi reward for all the work Kushner did in government to advance the kingdom’s interests in Washington.
With Trump again the Republican front-runner for president, his son-in-law’s work is drawing new attention in Washington, where Democrats have accused Republican lawmakers of turning a blind eye to Kushner’s business dealings and focusing instead on questions about the work done by President Biden’s son, Hunter.
Kushner and Mohammed developed an unusually close relationship while Trump was in the White House. In a memoir released last year, Kushner wrote that he repeatedly called the Saudi crown prince to secure help on key U.S. foreign policy issues, including oil prices. Kushner’s appeals created intense friction in the Trump administration, with then-Secretary of State Rex Tillerson accusing Trump’s son-in-law of undercutting his authority.
The Trump administration brushed off Congressional attempts to block billions of dollars in arms sales to Saudi Arabia, and Kushner backed the president’s decision to support Mohammed after he was accused of sending a hit team to Istanbul in 2018 to kill Jamal Khashoggi, a critical Saudi journalist who was living in America at the time.
When pressed on the issue, some Republicans have criticized Kushner, who had little experience in the field when he started Affinity.
“I think that what Kushner did crossed the line of ethics,” Rep. James Comer (R., Ky.) said earlier this month on CNN.
Saudi Arabia invested $2 billion with Kushner, making it Affinity’s largest investor. The kingdom agreed to pay Kushner tens of millions in management fees each year—even if he didn’t invest the money, said some Saudi officials involved in the deal.
The arrangement isn’t uncommon in the industry, but some Saudi officials viewed it as inappropriate for someone of his experience level. Mohammed overruled those concerns, said the Saudis involved in the deal.
Critics say that Kushner’s ability to collect substantial fees while making few investments fuels concerns that the Saudi money was payback for helping the kingdom in the White House and an effort to secure access to the Trump family if Trump returns to the White House in 2025.
“It appears to be money for nothing,” said Norm Eisen, a senior fellow in Governance Studies at the Brookings Institution. “In the absence of material transactions, this goes beyond a raised eyebrow to profound concerns about possible impropriety and quid pro quos.”
Kushner dismissed such criticism as unfounded. Lawmakers in Washington looking into his mix of political and business affairs have so far produced nothing to suggest that Kushner engaged in any illegal acts.
“Partisan politics aside, no one has ever pointed to a specific legal or ethical guideline that Jared or Affinity has violated,” said Chad Mizelle, the chief legal officer at Affinity.
Over its first two years, Affinity looked at more than 1,000 companies and signed deals with six. Kushner agreed to invest $700 million—about 20% of the fund.
Affinity invested $150 million in Dubizzle, a classified-ads site in the United Arab Emirates, and $200 million in Mosaic, an Oakland, Calif.-based firm that makes loans to residential solar projects. Last month, Affinity added a seventh deal by investing another $110 million in EGYM, a Munich-based fitness technology company.
As part of the deal, Saudi Arabia agreed to a special carve-out that allowed Affinity to invest the kingdom’s funds in Israel, even though the two nations have no official diplomatic relations. Qatar, which also has no official relations with Israel, also gave Affinity similar permission, Kushner said.
But Affinity made little headway in Israel, a key proving ground for Kushner, who was looking to capitalize on his White House work in the Middle East and his close ties with the region’s powerful leaders. Kushner said he and his team looked at over 100 Israeli companies, including Papaya Holdings, a global payroll and payment management site, and Phoenix Holdings, a leading Israeli financial services group.
A deal with Papaya came close, but was shelved after months of discussions.
“I think Jared is one of the brightest minds out there, and if I had an investment opportunity, he would definitely be one of my first calls,” said Eynat Guez, the CEO at Papaya. “He started the fund when the market changed, and a lot of things did not happen because there is a huge valuation gap between investors and funders.”
For Kushner, Affinity represents what he calls his third career, coming after a long run leading his family real-estate business and his time in the White House, where he spearheaded secret negotiations that led to the Abraham Accords, a historic series of agreements that normalized relations between Israel and the U.A.E., Bahrain, Morocco and Sudan.
Kushner also tried to broker a similar deal between Israel and Saudi Arabia, but that proved to be too difficult to navigate before Trump left office in 2021.
Members of the fund’s advisory board questioned the wisdom of working with Kushner, according to Saudi officials. But Mohammed dismissed their concerns and went ahead with the plans anyway, they said, in part because he felt Kushner’s work on the Abraham Accords demonstrated considerable business acumen.
Some advisers to the crown prince said the kingdom’s commitment is seen as a political investment more than a financial one.
The slow pace of investments created tensions inside Affinity, according to people close to the firm. Kushner hired 30 people to work at Affinity, which included a mix of veterans from private-equity firms and former Trump administration officials with little experience in the field. Kushner grew impatient with some on his team as they struggled to find investment opportunities, creating a high-pressure environment, these people said.
The internal tensions contributed earlier this year to the departure of Avi Berkowitz, a longtime Kushner friend who served as the White House’s key negotiator on the Abraham Accords, but who had no experience in private equity. Kushner said Berkowitz had been an incredible friend and partner and that he is excited to see what Berkowitz does next.
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While Affinity got off to a slow start, Kushner said he is now poised to take advantage of a more promising investment climate and is looking to invest another $800 million to $1 billion over the next year, with five or six deals on the horizon.
Kushner compared his work at Affinity to his White House work in the Middle East.
“If you would have asked: “Has Jared been successful in the Middle East after three years?” You would have said: no,” he said. “But then in Year Four, all of the foundational hard work I put in during the previous three years manifested in breakthrough after breakthrough. I’m not worried about what others say about me. All I am worried about is delivering results.”
Write to Dion Nissenbaum at dion.nissenbaum@wsj.com and Summer Said at summer.said@wsj.com
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Appeared in the August 18, 2023, print edition as 'Kushner’s Deal Making Gets Off to a Slow Start'