Sovereign Wealth Fund Institute

It seems that Middle Eastern based sovereign funds are more keen on investing in hospitality and resort developments compared to their Asian and European peers. This is good news for the Kingdom of Morocco.  Tourism is a key source of diversifiable revenue for the North African Kingdom of Morocco. The tourism industry in Morocco employs just below 500,000 people. Cash-strapped Morocco still suffers from high unemployment, a reliance on material exports, and has a young demographic profile.

In December 2010, Gulf sovereign investors parked money into the region.  Last week, the Qatar Investment Authority (QIA) and Morocco agreed to create a 50-50 joint venture worth US$ 2 billion that targets major development projects in Rabat.

Rabat is the capital and third largest city in Morocco.

In another deal, Qatar Holdings, the Kuwait Investment Authority’s Al Ajial Investments and Aabar Investments agreed with Morocco’s Fund for the Development of Tourism to inject US$ 2.5 billion into a newly-created vehicle called Wessal Capital. Wessal Capital will focus on developing new resorts in Morocco.

Proposed Equity Capital Structure of Wessal Capital

• 25% Qatar Holdings
• 25% Al Ajial Investments
• 25% Aabar Investments
• 25% Morocco’s Fund for the Development of Tourism

Established in November 2002, the National Technology Enterprises Company (NTEC) is a sovereign wealth enterprise of the Kuwait Investment Authority (KIA) that invests in technology companies and venture capital funds. NeuString received Series B financing from investors such as NTEC, Intel Capital, along with new and existing private shareholders. NTEC was capitalized with US$ 350 million and has invested in over 23 direct investments and 10 venture capital funds.

NeuString is a software company based in Dubai.

The Kuwait Investment Authority (KIA) is planning to open a representative office in Beijing. This signifies Kuwait’s increasing appetite for investment opportunities in mainland China, thus tightening Sino-Kuwait economic and political relations. Already, the Kuwait Investment Authority has participated in a number of noteworthy Chinese initial public offerings and investments.

Citic Securities is planning to list in Hong Kong by October 6th. The securities company is the largest in China by market value. Sovereign wealth funds have been investing in Chinese financial firms and banks for quite some time. Earlier we saw tremendous sovereign investor interest in the IPO of Agricultural Bank of China.  In this current environment, capital raising deals present many challenges to companies.

In getting a billion dollar plus corporate capital raise deal done, cornerstone investors involving sovereign wealth funds are almost a necessity.

Citic Securities has already fortified six cornerstone investors. These include the sovereign wealth funds of Temasek Holdings and the Kuwait Investment Authority. Including BTG Pactual SA which has received SWF investment in the past, the six cornerstone investors plan to purchase US$ 850 million in stock, or at least 44% of the offered shares.

Fosterlane Management Corporation, the sovereign wealth enterprise real estate arm of the Kuwait Investment Authority has purchased a 34-story office tower in New York City from Hines. The building is at 750 7th avenue and has Morgan Stanley as a key tenant. The office tower was built in 1989 and earlier bought by Hines  from Morgan Stanley.

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Kuwait is strengthening its economic position in Egypt. The Kuwait Investment Authority (KIA) is planning to set up a sovereign wealth enterprise to invest US$ 1 billion in Egypt’s stock market. This is a significant symbol of confidence in the Egyptian capital markets after the overthrow of Hosni Mubarak. [Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

Sovereign wealth funds are at it again, investing directly into another private equity management firm.  [Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

Japan’s nuclear crisis will have a lasting impact on existing and future nuclear infrastructure projects globally. Last year, sovereign funds began an aggressive campaign to bid on energy infrastructure, mostly in conventional energy assets.  [Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

Cristina Kirchner

According to the AFP, “Argentine President Cristina Kirchner on Sunday oversaw the signing in Kuwait of seven accords to boost cooperation with the oil-rich emirate at the start of a two-day visit.

Kirchner, on her first trip to the Gulf state, was greeted at the airport by Emir Sheikh Sabah al-Ahmad al-Sabah and other leaders, the official KUNA news agency said.  After the two leaders held official talks, the governments of the two countries signed the agreements on boosting cooperation in the fields of investments, agriculture and sports.

The accords cover economic and technical cooperation, a trade deal, two separate accords between Argentina and Kuwait Investment Authority, or the sovereign wealth fund, and Kuwait Fund for Arab Economic Development.

They also signed accords for cooperation in the fields of health, agriculture and sports.”

Read more: AFP

After a long series of tense negotiations with various potential institutional investors, Areva SA, the French controlled company is planning to receive capital by year end.  The firm has around 3% of its capital listed, which are non-voting investment certificates.  [Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

Businessweek reports, “France is close to selling a stake in nuclear-reactor maker Areva SA to Kuwait’s sovereign wealth fund, with the first stage of a capital increase “imminent,” Industry Minister Eric Besson told radio broadcaster Europe 1.  Besson wasn’t able to say whether that means “in a few hours or a few days,” he said in an interview with the broadcaster today. The minister said France will take part in the capital increase, declining to say for how much.

“The first phase of the recapitalization of Areva, you’re right, it’s imminent,” Besson said. “The negotiations are ongoing” and talks with the Kuwait fund “are advancing well.”

French Finance Minister Christine Lagarde said Dec. 1 that the country was in “active” talks with the Kuwait Investment Authority about selling a stake in Areva.

Source: Businessweek

According to Reuters, “Three Gulf Arab sovereign wealth funds and UAE-based property developer Al Maabar have raised 15 billion dirhams for a tourism fund that aims to put Morrocco among the world’s top 20 destinations.  Omar Bennani, who heads state-controlled Moroccan Touristic Engineering Company (SMIT), said the four investors were Bahrain’s Mumtalakat, the Kuwaiti Investment Authority (KIA), Qatar Investment Authority (QIA) and Al Maabar of the United Arab Emirates.

“The contribution of the four partners is of at least 15 billion dirhams … They are committed to support us throughout the next 10 years,” Bennani told Reuters in an interview on Wednesday.

He said the investors did not want their individual contributions to the Moroccan government-backed fund be made public. The fund aims to attract 100 billion dirhams in investment.

The fund will finance resort developments in Morocco that aim to more than double tourism receipts to 150 billion dirhams by 2020.”

Read more: Reuters

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BP is not a new investment for SWFs, especially Middle Eastern sovereign wealth funds.  Already the Kuwait Investment Authority is a large holder of the security, including many others.  In the past, numerous SWFs have taken small equity positions in BP.  Now with the possibility of a takeover from oil rivals and the need to increase their capital base, SWFs may come to the rescue at the right price and structure.  BP also has the option of selling assets in its oil producing portfolio as well.

According to the AP, “BP may be looking to sovereign wealth funds in the oil-rich Middle East to fend off takeover bids amid mounting costs from the Gulf of Mexico oil leak disaster, according to reports published Sunday.

The National, an Emirati newspaper, cited unnamed “informed sources” in the region saying that Mideast financial institutions have submitted proposals to BP advisers and are waiting for a response. Among the options being considered are the acquisition of key assets or a direct cash injection to help strengthen the oil giant’s balance sheet, according to the English-language paper.

The paper quoted a person it called an informed source as saying that “BP knows there is potential support from the Middle East.”

The National is owned by the government of Abu Dhabi, one of seven emirates that make up the United Arab Emirates federation. The sheikdom hosts the country’s capital and controls nearly all the OPEC member state’s oil reserves.

BP spokeswoman Sheila Williams in London declined to say whether the company had been approached by investors from the region.

“We don’t comment on financial issues,” she said.”

Source: AP

According to the AFP, “Agricultural Bank of China on Tuesday confirmed plans to raise a world-record 23.2 billion dollars in a dual initial public offering in Hong Kong and Shanghai.  The last of China’s “big four” state banks to list said it would raise the money if the monster IPO is fully subscribed when it begins on Wednesday.

Major institutional investors including sovereign wealth funds have already expressed strong interest in the IPO, which is on course to surpass the previous record of 22 billion dollars set in 2006 by Industrial and Commercial Bank of China (ICBC).  AgBank said Tuesday that it planned to raise 13.1 billion US dollars from its Hong Kong IPO, with a price range of 2.88-3.48 Hong Kong dollars (37-44 US cents) a share. Xiang Junbo, chairman of AgBank, said government efforts to boost growth in China’s depressed central and western regions would help the rural lender.

“The county area business will be one of our key profit drivers,” he told a press conference in Hong Kong on Tuesday. “(AgBank) is well positioned to capitalise on China’s next wave of growth.”

The bank, which has been criticised for the amount of bad loans on its books, has worked in recent years to chop that figure, Xiang said.

Agbank’s prospectus said its bad debt ratio dropped from 4.32 percent in 2008 to 2.91 percent in 2009.

“The bank has made substantial improvement in the last few years,” Xiang said, referring to its credit review procedures.

The newly released prospectus said AgBank booked a profit of 65 billion yuan (9.56 billion US dollars) in 2009, up from 51.45 billion yuan in 2008. It is forecasting a 2010 profit of 82.9 billion yuan. Xiang also said a stronger yuan — demanded by the United States and other trading nations which claim they have been hurt by an unfairly cheap Chinese currency — could be “positive” for AgBank.”

Read more: AFP

According to the AFP, “Agricultural Bank of China’s initial public offering, set to be the world’s largest, has drawn 11 heavyweight investors who have stumped up 5.45 billion US dollars for the sale, a report said Thursday.

Shares in the company’s Hong Kong listing will be set between 2.88 and 3.48 Hong Kong dollars (37 and 44 US cents) ahead of their trading debut next month, Dow Jones Newswires said, citing a company prospectus.

A price range has not been revealed for the Shanghai portion of the listing.

The details came as AgBank — the last of China’s big four lenders to list its shares — kicked off an investor roadshow to drum up support for a sale that could draw almost 25 billion US dollars.

That would surpass the Industrial and Commercial Bank of China’s 22-billion-dollar IPO in 2006, which is currently the world’s biggest.

Gulf state investment funds Qatar Investment Authority and the Kuwait Investment Authority, US food giant Archer Daniels Midland, Australia’s media-to-heavy-equipment firm Seven Group Holdings, British Bank Standard Chartered and Dutch financial-services firm Rabobank are among the cornerstone investors, Dow Jones said.

The sale’s other major investors are: Singapore state investment company Temasek Holdings, United Overseas Bank, Hong Kong billionaire Li Ka-shing’s Cheung Kong (Holdings), tourism monopoly China Travel Services Group and state-run consumer group China Resources (Holdings).”

Source: AFP

According to the AFP, “Barclays survived the international credit crunch without government support unlike rival British banks that were bailed out by the taxpayer.

Instead, the group won a seven-billion-pound capital injection largely backed by Abu Dhabi and Qatar. Abu Dhabi has since sold most of its holding, while Qatar’s sovereign wealth fund, the Qatar Investment Authority, has trimmed its Barclays stake.”

read more: AFP

Bloomberg reports, “Kuwait Investment Authority, the emirate’s sovereign wealth fund, made about a 40 percent return on its $750 million investment in BlackRock Inc.’s capital increase in May, the fund’s chief Bader al-Saad told the Al- Arabiya TV channel in an interview in Davos.

The sovereign wealth fund also was among a group of investors that had bid for Cadbury Plc, he said. Cadbury later agreed to an offer from Kraft Foods Inc.

Sovereign wealth funds, fueled in part by oil revenue, have been sources of capital around the world for companies including Citigroup Inc. and Morgan Stanley, helping them to withstand the credit-market seizure that followed the collapse of U.S. subprime mortgages. The KIA in December said it sold its stake in Citigroup for $4.1 billion and made a profit of $1.1 billion. The Kuwaiti fund’s $2 billion investment in Bank of America Corp., which lost 35 percent of its value, isn’t a source of concern, al-Saad said. The fund’s chief said he expects any sale of the stake in the U.S. bank to yield a profit. “

read more: Bloomberg

Kuwait’s Sovereign wealth fund has made a profit of $1.1 billion (€739 million) after selling its 5 per cent stake in Citigroup for $4.1 billion less than two years after acquiring preference shares in the largest US bank during the global financial crisis.

Kuwait Investment Authority (KIA) converted preferred stock in Citigroup that it purchased for $3 billion last year into common shares and sold them, earning a 37 per cent return on its investment. The sale comes as Citigroup is set to intensify efforts to break free from US government emergency bank funding programmes.

Citigroup is racing against the clock to convince US authorities that it be allowed to repay $20 billion of bail-out funds, with insiders and regulators arguing that unless the bank acts within the next 10 days it will have to wait for more than a month.

read more: Irish Times

According to the Reuters, “The Kuwaiti Investment Authority (KIA) may be considering investing in German auto parts supplier Continental AG, German business weekly WirtschaftsWoche reported on Saturday.

In an article flagged ‘Continental: The auto parts supplier talks to the sovereign wealth fund of the emirate of Kuwait over possible investment,’ the magazine said ‘Kuwaiti investors’ have been in contact with Chief Executive Karl-Thomas Neumann in the past few days.

The investors also held a meeting in Hanover with the premier of Continental’s home state of Lower Saxony, Christian Wulff, to discuss the political feasibility of a possible investment, the weekly said.”

read more: Reuters

Reuters reports that, “OPEC oil exporter Kuwait is looking to raise its stake in the Industrial and Commercial Bank of China(ICBC) and invest in Chinese energy and industrial sectors, its finance minister said on Friday. Speaking to Reuters on the sidelines of the World Economic Forum at the Dead Sea in Jordan, Mustapha al-Shamali also said the world’s fourth-largest oil exporter would not reduce its dollar-denominated assets. Kuwait is home to one of the world’s largest sovereign wealth funds, the Kuwait Investment Authority (KIA).

‘We have an investment in ICBC. We have a portion of it and we are going to enlarge it,’ Shamali said in an interview, without disclosing the size of the stake.

‘We could get our share from the market,’ he said.”

read more: Reuters

According to Reuters, “Kuwait’s finance minister expressed confidence in the Gulf Arab state’s sovereign wealth fund investment in U.S. bank Citigroup, saying in remarks published on Tuesday that it could turn profitable.

‘Our investment in Citi… is beneficial… and God willing we will reach a stage where it becomes profitable,’ Mustapha al-Shamali told al-Rai newspaper.

The Kuwait Investment Authority (KIA), which manages state assets in the world’s fourth-biggest oil exporter, has come under fire from some parliamentarians for investing $5 billion last year in U.S. banks Citigroup and Merrill Lynch has since been bought by Bank of America.”

read more: Reuters

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Reuters reports that, “The Kuwait Investment Authority (KIA), the Gulf Arab state’s sovereign wealth fund, has reduced exposure to global stock markets since October, shifting assets instead into short-term cash funds, a government report said. In a briefing to parliament, the government said KIA had cut the ratio of international share investments in a key fund in a bid to minimize the effect of the global financial crisis on Kuwait, the world’s seventh-largest oil exporter, according to a copy of the report obtained by Reuters on Sunday. The news comes after KIA, which manages Kuwait’s substantial oil-generated assets, last year burned its fingers by buying into U.S. banks such as Citigroup and Merrill Lynch before both stocks nosedived and the latter filed for bankruptcy protection.

Kuwait Investment Authority, which like other sovereign wealth funds does not disclose its investment policy, had come under fire in parliament for making those investments.”

read more: Reuters

Dow Jones reports that, “The latest fund was at $12.5 billion in April with the majority of that amount collected in 2007. The vehicle raised $3 billion between the end of 2007 and April. That meant that Apollo was also somewhat sheltered from the market tumult following the Lehman Brothers Holdings’s bankruptcy in September, which took overall private equity fund-raising into a more severe slowdown. The majority of capital for the vehicle was raised before that event as Apollo had closed on $14 billion as of August.

Limited partners in the new fund include Teacher Retirement System of Texas, California Public Employees’ Retirement System, Canada Pension Plan Investment Board, Kuwait Investment Authority, Los Angeles City Employees’ Retirement System, Oregon State Treasury, Louisiana State Employees’ Retirement System, San Francisco Employees’ Retirement System, Portfolio Advisors LLC, Santa Barbara County Employees’ Retirement System, San Bernardino County Employees’ Retirement Association, New Mexico Educational Retirement Board and Los Angeles Fire and Police Pensions.”

read more: Dow Jones Private Equity Analyst

Reuters reports that, “Kuwait’s sovereign wealth fund does not plan to reduce its overseas investments despite launching a 1.5 billion dinar ($5.17 billion) fund to invest in local stock markets, the finance minister said.

‘We won’t lower foreign investment,’ Mustapha al-Shamali told Reuters on the sidelines of an Arab economic meeting in Kuwait, when asked whether the Kuwait Investment Authority would scale back its foreign activities.

KIA, which manages the Gulf state’s massive oil-generated assets, has invested around the globe and last year bought into U.S. banks such as Citigroup Inc.

In December, it launched on behalf of the government a fund to stabilise the second-largest Arab bourse .KWSE, which fell 38 percent last year during a regional stock market rout triggered by the global financial crisis.”

read more: Reuters

Reuters reports that, “a Kuwait government fund launched to stabilise the Gulf state’s bourse was seeking long-term investments in stocks, the managing director of the Kuwait Investment Authority (KIA) said on Sunday.

In November, Kuwait asked its sovereign wealth fund KIA to set up the fund to shore up the second largest Arab bourse , which fell 38 percent last year during a regional stock market rout triggered by the global financial crisis.

The fund, which started operations on Dec. 24, was seeking long-term investments, Bader al-Saad said at a news conference on Sunday.

Kuwaiti Minister of Finance Mustapha al-Shamali said last month the fund would invest least 1.5 billion dinars ($5.42 billion).”

read more: Reuters

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The Information Consultant at the Kuwait Investment Authority, Mr. Qais Ibraheem Al-Shatti announced to Kuwait News Agency, that the executive committee at the KIA held a meeting yesterday chaired by the Minister of Finance Mr. Mahmoud Al Nouri to follow up the results of the tour of H.H. the Prime Minister Sheikh Sabah Al Ahmed Al Sabah to the Eastern Asia countries. The executive committee decided to implement practical steps reflecting such visit by adopting four major approaches being the opening of a representative office in Shanghai or Hong Kong depending on the facilities available in order to follow up the development of the legislations, studying the investment opportunities and privatization projects in China, to contribute up to 20% with Kuwait private sector in the incorporation of an investment company in China and cooperate with some of public Institutions and international banks by studying the investment in the Peoples Republic of China in the real estate, insurance, international banking and other sectors in order to benefit from the economic growth. Also to study the incorporation of a joint Venture with Chinese Government to enter into the privatization projects on one hand and the technology and leading projects on the other.

The executive committee believes that the Eastern Asia countries and China in particular, enjoy very high growth rates and hold huge cash reserves, which qualify them to maintain their economic growth. Also there are worthy investment opportunities, which encourage us to proceed in order to realize and materialize such approaches despite the fact that some of these countries lack the legislations that encourage investment

Read more: Kuwait Investment Authority