Sovereign Wealth Fund Institute

According to the press release, “Dexia, Precision Capital and the State of the Grand Duchy of Luxembourg announce that they have entered into a binding memorandum of understanding on the acquisition by Precision Capital and the Grand Duchy of Luxembourg of the 99.906% stake in Dexia Banque Internationale à Luxembourg S.A. owned by the Dexia Group.

Precision Capital, a Qatari investment group, will acquire 90% of the stake, the remaining 10% will be acquired by the Grand Duchy of Luxembourg.  The transaction price values 100% of the shares in Dexia Banque Internationale à Luxembourg at EUR 730 million.

The participation of Dexia Banque Internationale à Luxembourg in Dexia Asset Management Luxembourg and RBC Dexia Investor Services Limited will be disposed of separately. The portfolio of Legacy securities of Dexia Banque Internationale à Luxembourg as well as its stakes in Dexia LDG Banque and Parfipar will be transferred to Dexia prior to the closing of the transaction. The parties will negotiate the final legal documentation of the transaction in the coming weeks. The transaction remains subject inter alia to all required regulatory approvals, including approval by the European Commission. Dexia will keep the social partners duly informed. The sale of Dexia Banque Internationale à Luxembourg is one of the disposals that were contemplated by the Dexia Group as announced on 20 October 2011.”

Read more: Dexia Press Release

The nations of Southeast Asia and the Gulf continue to build economic, social, and investment ties, especially due to the presence of Muslim culture embedded in both regions. Over the past few years trade between Malaysia and Qatar has increased. Malaysia and Qatar have announced a $2 billion joint investment fund that will target opportunities in both countries and bordered states. Each country will contribute around a billion into the joint fund. The prime ministers of both countries signed letters of intent on cooperation agreements in the areas of high education and tourism.

Malaysia is actively trying to increase foreign direct investment and diversify their economy. The nation has transformed itself from a raw material country to a nation with manufacturing, services, and Islamic finance. In fact, the Government of Malaysia has created economic incentive programs to develop targeted regions such as the Kuala Lumpur International Financial District (KLIFD). The KLIFD wants to be the hub for the Islamic finance industry.

According to the press release, “His Excellency Dr. Mohammed bin Saleh Al-Sada, Minister of Energy and Industry of the State of Qatar, and Peter Voser, Chief Executive Officer of Shell, signed today a Heads of Agreement that sets the scope and commercial principles for the development of a world-scale petrochemicals complex in Ras Laffan Industrial City, Qatar. This agreement follows the conclusion of a joint feasibility study conducted by the partners, Qatar Petroleum and Shell.

The scope under consideration includes a world-scale steam cracker, with feedstock coming from natural gas projects in Qatar; a mono-ethylene glycol plant of up to 1.5 million tonnes per annum using Shell’s proprietary OMEGA (Only MEG Advantaged) technology; 300 kilotonnes per annum of linear alpha olefins using Shell’s proprietary SHOP (Shell Higher Olefin Process); and another olefin derivative. The complex will produce cost-competitive petrochemicals products to be marketed primarily into Asian growth markets. Qatar Petroleum will have an 80% equity interest in the project and Shell 20%.

His Excellency Minister Al-Sada said: “This critical petrochemicals project fits well with Qatar’s strategy to strengthen and further diversify its growing chemicals industry and represents an important milestone on our journey to become a significant global petrochemicals producer. In line with directives of His Highness, the Emir, Sheikh Hamad Bin Khalifa Al Thani, this large petrochemicals complex will provide Qatar with another viable option to extract optimal value from its natural gas resources.”

Peter Voser added: “This agreement marks the beginning of another partnership with Qatar Petroleum for the development of a world-scale petrochemicals project in Qatar. Coming on the heels of the inauguration of Pearl GTL, this new venture demonstrates the commitment of both parties to deepen our relationship even further. Shell values the opportunity to bring to Qatar the expertise and technology necessary to deliver a petrochemicals project of this scale and looks forward to its successful delivery.”

Qatar Petroleum and Shell have delivered Pearl Gas-to-Liquids (GTL) and Qatargas 4 this year; two of the world’s largest projects built in Ras Laffan Industrial City.”

Read more: Shell Press Release

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

Sovereign wealth funds are no strangers to European football clubs. Football clubs present an attractive investment opportunity for strategic sovereign funds as it gives them exposure to the advertising and entertainment sectors. The Libyan Investment Authority used to own a part of the Juventus club. In June 2009, Colony Capital bought out Morgan Stanley’s interest in the French football team, Paris Saint-Germain (PSG). Colony Capital is now looking to sell its holding in Paris Saint-Germain. They are looking to sell their 95.8% stake in the club.

One potential suitor is the Qatar Investment Authority. It is rumored that the proposed deal figure is around €50 million. Not to also mention, the Emirates Group is an official partner of PSG and has renewed their team sponsorship until the 2013-2014 season.

Qatar will be hosting the 2022 FIFA World Cup. Qatar is the first Arab nation to host a World Cup.

According to the press release, “Qatar Holding LLC and IBERDROLA, S.A. are pleased to announce today that they have signed a Strategic Memorandum of Understanding setting forth the framework for collaboration in developing their respective business activities through the establishment of a long-term, mutually beneficial, strategic partnership.

The two parties will cooperate for the purpose of developing new business opportunities in different areas of the global electricity value chain with a focus on high-growth and emerging markets. IBERDROLA also intends to establish its regional Headquarters as well as research and development operations in the State of Qatar.

Additionally, Qatar Holding through its wholly-owned subsidiary has fully subscribed to the 6.17% capital increase approved by the Board of Directors of IBERDROLA for a total investment amount of €1,906 million. The issue price is €5.633 per IBERDROLA share. Further, Qatar Holding through its wholly-owned subsidiary has agreed to acquire treasury shares representing 0.37% of the share capital of IBERDROLA pre-increase, at the same price per share for a total purchase amount of €115 million. Consequently, Qatar Holding through its subsidiary will hold 6.16% of the share capital of IBERDROLA outstanding after the capital increase. The cash inflow from the capital increase will allow IBERDROLA to strengthen its financial position and pursue corporate transactions such as its proposed merger with IBERDROLA RENOVABLES, S.A., the acquisition of Elektro Electricidade e Servicios, S.A. in Brazil, and other growth opportunities.”

Read more: Iberdrola Press Release

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According to Arabian Business, “Qatari Diar, the real estate arm of Qatar’s sovereign wealth fund, has joined the race to buy and manage half of the Olympic Village in London.

The state-owned firm plans to submit a joint bid with British property developer Delancey to buy up around half of the 2,800 homes at the village, together with an adjacent plot of land with the potential for further 2,000 – 2,500 new homes.  The pair will compete against eight other bid groups for the contract, overseen by the Olympic Delivery Authority (ODA), which would require the firms to deliver 2,818 new homes for East London after the 2012 Games.

About 1,300 of the new homes have been bought by Triathlon Homes for £270m (about $419m) and are designated to become affordable housing.”

Read more: Arabian Business

The press release states, “HOCHTIEF Aktiengesellschaft welcomes Qatar Holding LLC (Doha) as new major shareholder: HOCHTIEF increases the capital stock of the company by around ten percent under exclusion of subscription rights of existing shareholders. After acquiring all new shares, Qatar Holding will – as soon as the capital increase is registered with the commercial register – hold almost 9.1 percent of the new capital stock. The Ad-hoc Committee of the HOCHTIEF Supervisory Board has approved the capital increase. Qatar Holding LLC is the strategic and direct investment arm of Qatar Investment Authority.

The capital increase will be carried out by partly making use of the authorized capital created at the HOCHTIEF General Shareholders’ Meeting on May 11, 2010, by issuing 6,999,999 no-par-value shares against cash contributions. According to the resolution of the General Shareholders’ Meeting, subscription rights of existing shareholders are excluded. The issue price is EUR 57.114 per share, resulting in an equity contribution of almost EUR 400 million to HOCHTIEF. “The cash inflow from the capital increase strengthens the financial position of HOCHTIEF. In addition, it provides latitude for the announced further growth after the planned bond issue had to be called off in mid-September,” says CEO Dr. Herbert Lütkestratkötter.”

Read more: Hochtief Press Release

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Yamal Peninsula, Russia

Britain isn’t the only European nation luring sovereign investment; Russia is vying for it too.  The Qatar Investment Authority has been spending ample time with Eastern European nations on developing energy project investments.  [Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

According to the AP, “The Emir of Qatar, the ruler of a tiny, oil-rich nation in the Persian Gulf, is visiting Britain for talks with Queen Elizabeth II and Prime Minister David Cameron.  Sheik Hamad bin Khalifa Al-Thani began his three-day visit Tuesday with Sheika Mozah bint Nasser al-Missned, the most high-profile of his three wives.  Britain is seeking closer ties with Qatar, a British protectorate until 1971, as it attempts to woo new investors.

In May, Qatar Investment Authority — the country’s sovereign wealth fund — bought London’s iconic Harrods department store.

The emir said in an interview published Monday in the Financial Times that Qatar would also be interested in acquiring Britain’s famed auction house Christie’s.”

Source: AP

According to Reuters, “Qatar is in preliminary talks with the governments of Argentina and Ukraine to buy farmland for cereals production, the head of the Gulf Arab state’s national food security programme said on Wednesday.

The deals would be worth “$100 million-plus each”, Mahendra Shah told Reuters in an interview. They are part of Qatar’s drive to secure its food supplies by investing in agricultural projects abroad.

Qatar imports 95 percent of its food and has only two days’ worth of water reserves. So it relies heavily on imports and is constantly looking at options to gain additional food and water resources through Hassad Food, the agricultural arm of its sovereign wealth fund. “We have done deals in Brazil and Australia and now we are in negotiations with Argentina and Ukraine,” said Shah, director of Qatar National Food Security Programme. “These are countries that are willing to sell their land to grow cereals,” he said.

As criticism has mounted over the past two years of so-called “land-grab” deals, where rich food-importing countries buy land in poorer nations, Qatar had focused on richer countries with more abundant land and stronger legislation, where its investments would be less controversial, Shah said.

He also said Qatar was keen to develop partnerships with target countries, which would foster their development and improve the livelihoods of local farmers. “I think a lot of countries are rethinking their strategy. If you are being criticised for transferring food insecurity from your own country to another one, then you may want to go where there is less criticism,” he said.”

Read more: Reuters

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According to Reuters, “Hassad Food, owned by Qatar’s sovereign wealth fund, plans to acquire a sugar project in Brazil, the state-run Qatar News agency said, citing the firm’s chairman.

Qatar, like other Gulf states, imports the majority of its food requirements, and securing future food supplies is seen as a priority by the government.

The acquisition in Brazil is expected to take place in two months time, Nasser al-Hajri told QNA, giving no further details of the project.

Around 70 percent of the sugar is planned to be shipped to Qatar for domestic use, while the remaining 30 percent will be used to produce bio-fuels, QNA said.”

Source: Reuters

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According to Businessweek, “Qatari Diar Real Estate Investment Co. plans to raise $3.5 billion in a bond sale, the Financial Times reported. Qatari Diar, the property arm of Qatar’s sovereign wealth fund, is expected to launch a roadshow for the sale in London as early as tomorrow, the FT said.

Qatar Diar Finance, the unit issuing the bond, was rated Aa2 by Moody’s Investors Service, which also gave a provisional rating of Aa2 to the proposed bonds, the newspaper said.”

Read more: Businessweek

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’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

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China Daily states that, “The Qatar Investment Promotion Department is planning to establish an office in China next year to facilitate mutual investments between the two countries, a company executive said today.

The office will be set up in Beijing, according to Farzam Kamalabadi, President and Chairman of Future Trends International (Group) Corporation, a China-specialist US Corporation engaged in investment and trade consulting, media relations, and government lobbying.

The office will help Qatar investors, including Qatar’s sovereign wealth fund, to seek investment opportunities in sectors such as banks, real estate, water treatment, infrastructure and chemical in China, said Kamalabadi, who once served as senior adviser to a number of national oil systems such as Oman, Iran, Kuwait, and China.”

read more: China Daily

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According to the press release, “South African Deputy Foreign Minister Sue van der Merwe will hold the first round of bilateral consultations with the Assistant Foreign Minister for Follow-Up Affairs of the State of Qatar Mr Mohammed Abdullah Al-Rumaihi at the Twelve Apostles Hotel and Spa in Camps Bay, Cape Town on Wednesday 04 February 2009.

Qatar Investment in South Africa and Africa
The Qatar Investment Authority has invested US$400 million in an investment fund, the PME Infrastructure Management Limited Fund. The fund is investing in infrastructure in Africa and is concentrating on the areas of transportation, communication and energy. According to the Government of Qatar, South Africa is the biggest beneficiary and of this fund which is considered to be the first investment by the Qatar Investment Authority in South Africa.

South African Investments in Qatar
South African companies have been fairly successful in obtaining contracts for major projects in Qatar. Sasol and Qatar Petroleum entered into a US$900 million joint venture gas-to-liquid facility at Ras Lafan. The plant was inaugurated on 6 June 2006 by the Minister of Minerals and Energy Bulelwa Sonjica.”

read more: South Africa – Department of Foreign Affairs

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The UK Prime Minister Gordon Brown met with Qatar and ADIA officials in the Middle East to discuss foreign investment in United Kingdom’s alternative energy market. According to Thomson Reuters, “he told reporters that Britain and Qatar were looking at a new joint energy fund to invest in British energy industries, and that talks with the Abu Dhabi Investment Authority about investment opportunities in Britain were moving forward.”

read more: Thomson Reuters

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