Qatari Wealth Fund to Create $100 Billion Unit in Overhaul

Qatar Overhauls Wealth Fund Creating $100B Unit
  • Sovereign investor said to group local assets in separate unit
  • Qatar Holding name said to be abandoned as part of changes

Qatar’s sovereign wealth fund is undergoing its biggest overhaul since 2014, grouping $100 billion of investments in local companies into a new unit and abandoning the Qatar Holding name synonymous with its highest-profile deals, people with knowledge of the matter said.

About $100 billion of the Qatar Investment Authority’s stakes in companies such as Qatar Airways and Qatar National Bank SAQ will be placed into a new internal division named Qatar Investments, the people said, asking not to be identified because the information is private. The fund is seeking to bring greater oversight by having a single person in charge, the people said. Ahmed Al-Rumaihi, a former Qatari diplomat in the U.S., will head the unit, they said.

The Qatar Holding name, under which the emirate gained an international profile after investing in companies ranging from Glencore Plc to Barclays Plc will now be replaced by the QIA name on international investments, the people said. The country isn’t planning to allocate any new money to the QIA this year or withdraw funds and has asked it to rely on asset sales or dividend income for new investments, one of the people said.

The changes at the QIA show that even the biggest sovereign wealth funds are having to shift focus as the slump in the oil price brings to an end an era of vast wealth accumulation and buyouts of trophy assets around the globe. The value of listed equities held by the world’s largest funds will probably drop to $2.64 trillion this year, from about $3.04 trillion at the end of 2015, according to a report published in February by the Sovereign Wealth Fund Institute. Funds based in the oil-rich Persian Gulf, such as the Abu Dhabi Investment Authority and Qatar Investment Authority, are facing the most “financial distress,” the report said.

The QIA declined to comment, while calls to Al-Rumaihi’s mobile phone weren’t answered.

CEO Changes

The changes are among the biggest initiatives undertaken by the fund since royal family member Sheikh Abdulla bin Mohamed bin Saud Al Thani was appointed chief executive officer in 2014. Under Sheikh Abdulla, the fund is boosting its focus on Asia and the U.S. as it seeks to diversify the geographic location of its assets. Diversification “is a key objective established by QIA’s strategic review,” the fund said in a statement last September.

Under former CEO Sheikh Hamad bin Jassim Al Thani, who was also Prime Minister and Foreign Minister of Qatar, the QIA embarked on an international acquisition spree that included buying trophy assets like London department store Harrods and the Shard office tower. Since his departure in 2013, some of the bets have unraveled. Shares in Glencore, in which the QIA is the largest investor, plunged 55 percent over the past year while Volkswagen AG, in which the fund is the third-largest investor, have fallen 39 percent.

Hiring Spree

The fund is also other hiring senior executives amid the changes, according to the people. Phil Dunne, former chief financial officer at Citigroup Alternative Investments, recently joined as CFO, the people said, while Ole Christian Froseth is the new head of fixed income. The QIA also recruited Darren Winstone from neighboring fund Abu Dhabi Investment Authority as its new head of passive investments in April, a unit which seeks to invest through external fund managers, they said.

The Qatari fund, the ninth-largest sovereign wealth fund in the world with more than $250 billion of assets according to the Sovereign Wealth Fund Institute, said last year it’s planning to invest $35 billion in the U.S. over the next five years as it opened an office in New York. The QIA is the biggest foreign buyer of U.S. offices so far this year after partnering with office REIT Douglas Emmett on a $1.34 billion acquisition of four Los Angeles office buildings, according to Bloomberg Intelligence.

Saudi Arabia is also restructuring its sovereign investment strategy as it looks to diversify the economy away from oil. The government will transfer its ownership of state-oil company Saudi Aramco to the Public Investment Fund and sell a stake of not more than 5 percent to the public. The move will transform the PIF, as the fund is known, into the world’s largest sovereign investment company with assets of more than $2 trillion.

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