Emerging Markets Roundup: Middle East

SOVEREIGN WEALTH FUNDS JUMP INTO THE MARKETS

 

By Gordon Platt

 

Middle Eastern sovereign wealth funds (SWFs) are once again dipping their toes in markets worldwide, even those that saw investments last year grow cold.

 

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Saudi power company launches landmark sukuk

Qatar’s sovereign wealth fund, for example, made headlines recently with its purchase of a 5.2% stake in Tiffany, the upscale New York jeweler. The Qatar Investment Authority (QIA) already owns London department store Harrods and holds small stakes in other luxury goods purveyors.


While SWFs target quality assets, this has not prevented them from sustaining losses on their investments. Mubadala, the Abu Dhabi government investment company, lost more than $1.1 billion last year, after making heavy investments in semiconductor businesses. Mubadala recently announced a $2 billion investment in a Brazilian equity fund run by billionaire Eike Batista’s EBX Group. Mubadala’s 5.63% stake is structured as preferred equity and is part of a strategic partnership agreement.


Qatar and South Korea announced plans to jointly invest in overseas construction projects, beginning with a road in Ghana and a coal terminal in Indonesia.


Saudi Electricity launched a landmark $1.75 billion sukuk in April, the biggest international capital markets transaction by a Saudi corporate. More than 440 investors placed orders for more than $17.5 billion, according to lead managers Deutsche Bank and HSBC.

 

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