Text size:

  • Small
  • Normal
  • Large

Region's sovereign funds profiting from rescues in West

Providing money and standing back is mark of investors from Gulf

Government-owned funds in the Gulf have made a number of headline-grabbing investments in struggling western institutions during the financial crisis and are now eyeing strategic stakes in BP as it looks to avoid a takeover after the Deepwater Horizon disaster. The investments have tended to come during rocky periods for the targets, along with a promise from the suitors to invest patiently and not try to take over management or use their stakes for political leverage.

The largest deals have been inked by the Abu Dhabi Investment Authority (ADIA), one of the world's biggest sovereign wealth funds, the Kuwait Investment Authority (KIA) and Qatar Investment Authority (QIA). In some cases, the funds have exited deals profitably, as when ADIA and the QIA made billions of dollars last year unloading their investments in the British banking giant Barclays. Other deals have ended less satisfactorily. ADIA is in arbitration with Citigroup in New York over the terms of a US$7.5 billion (Dh27.54bn) stake it took in November 2007.

After ADIA's investment in Citigroup, the next major play by a Gulf fund in western markets came in early 2008: the KIA invested $3bn in Citigroup and $2bn in Merrill Lynch, the brokerage giant that was forced into a merger later that year with Bank of America. In December last year, the KIA said it had sold its Citigroup stake, booking a profit of about $1.1bn. In October 2008, Sheikh Mansour bin Zayed, Minister of Presidential Affairs, bought 5bn (Dh27.78bn) of Barclays securities that converted into shares.

The investment, along with an injection of about 1.7bn from the QIA, helped Barclays avoid a rescue from the UK government amid the strains of the financial crisis. The investment was later transferred to the Abu Dhabi Government-owned International Petroleum Investment Company (IPIC), which made about 1.5bn when it exited part of the investment in June last year. The QIA sold some of its shares for a profit but still owns about 6.76 per cent of Barclays, according to regulatory filings.

The investments in Barclays have been some of the funds' most successful to date. They have fared far better than investments in Citigroup, which has seen its shares plunge from above $30, when the investments were made, to below $4 today. While the sovereign funds' financial-sector rescues have attracted a great deal of attention, Gulf governments and their numerous investment arms have also been party to significant deals in other industries.

Aabar Investments, a company about 70 per cent owned by IPIC, has been one of the region's most active asset-buyers in the past year, acquiring a 9.1 per cent stake in the German car maker Daimler and 32 per cent of Virgin Galactic, Sir Richard Branson's commercial space flight venture. afitch@thenational.ae

Back to the top

More articles

Editor's Picks

 The Greens, villas: Q1 no change. 3BR - Dh210-250,000. 4BR - Dh210-260,000. 5BR - Dh220-300,000. Q1 2013-Q1 2014 5% rise. Pawan Singh / The National

In pictures: Where Dubai rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Dubai have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 Miele coffee maker making Cappuccino at Miele Gallery in Sama Tower in Dubai. The cost of this coffee maker is around Dh 17,000. Pawan Singh / The National

Space-age coffee comes at a price from Miele

Miele have taken the coffee machine to a new level with its Dh17,000 offering that is built into your kitchen.

 The bridge of Seajacks Hydra, as the wind farm installation vessel undergoes finishing touches and testing works at Lamprell’s Hamriyah facility in Sharjah before its planned delivery on June 2, 2014. Jeffrey E Biteng / The National

In pictures: Building the Seajacks Hydra

The Seajacks Hydra, a wind farm installation vessel, is undergoing finishing touches and testing works at Lamprell’s Hamriyah facility in Sharjah before its planned delivery on June 2, 2014.

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 The rush of new supply of hotel rooms pushed Dubai occupancy rates down to 87 per cent. Sarah Dea / The National

Dubai hotel room rates rise 10 per cent

The rush of new supply pushed occupancy rates down to 87 per cent, a dip of 2.6 per cent from the previous year. Winter months are the strongest for Dubai hotels, with occupancy and prices falling to half their peaks by July.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.


To add your event to The National listings, click here

Get the most from The National