World’s Oldest Wealth Fund Eyes Global Infrastructure Deals

KUWAIT-PARLIAMENT-POLITICS-ECONOMY-BUDGET-OIL

Kuwaiti Finance Minister Anas al-Saleh.

Photographer: YASSER AL-ZAYYAT/AFP via Getty Images
  • Kuwait’s SWF has shied away from trophy assets, chairman says
  • KIA was set up in 1953, describes itself as world’s oldest SWF

The Kuwait Investment Authority, which describes itself as the world’s oldest sovereign wealth fund, is targeting global infrastructure projects after taking part in a consortium that bought the London City Airport this year, Chairman Anas Al-Saleh said.

The fund has shied away from purchasing trophy assets, focusing on deals that “give us our targeted returns,” Al-Saleh, the country’s deputy premier and minister of finance, said in an interview in Kuwait City on Wednesday.

With $592 billion in assets under management, KIA is the world’s oldest and fifth-largest sovereign wealth fund, according to data compiled by the Sovereign Wealth Fund Institute. The fund traces its roots to the Kuwait Investment Board, which was established eight years before the country’s independence in 1961, according to its website. It has investments in areas including equities, bonds, real-estate and infrastructure.

“Our interest now is infrastructure projects,” Al-Saleh said. “KIA has been active lately, the last project was London City Airport. We are, with our strategic partners, looking for opportunities internationally for infrastructure projects.”

Withdrawing Funds

The plunge in crude prices has prompted oil-rich nations from Norway to Saudi Arabia to dip into wealth funds as well as foreign-currency reserves. Kuwait, OPEC’s fifth-biggest producer, will post a budget shortfall of 10 percent of economic output in the current fiscal year, according to Moody’s Investors Service.

The value of listed equities held by the world’s largest wealth funds will probably drop to $2.64 trillion this year, from about $3.04 trillion at the end of 2015, the Las Vegas-based SWFI said in a report published in February. Al-Saleh said the KIA has been active in the real-estate industry. “In major cities, most of those major cities we have a good footprint.”

He also said the government has dipped into KIA’s “general reserve fund” to finance the budget shortfall, but has maintained its policy of adding 10 percent of revenue to its so-called Future Generations Fund.

“We’re injecting and we’re taking out of it to finance our budget.”

Kuwait’s decision to withdraw some funds from the KIA contrasts with Qatar, which isn’t planning to allocate any new money to its sovereign fund this year or make any withdrawals, a person familiar told Bloomberg this week.

Neighboring Saudi Arabia is 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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