Qatar Sets Up $12 Billion Fund for Distressed Foreign Assets

Qatar, home to the world’s third-largest gas reserves, said it’s creating a $12 billion investment fund to buy distressed assets overseas and will seek to sell shares in the new entity to investors within weeks.

Qatar Holding LLC, a unit of the Persian Gulf emirate’s sovereign-wealth fund, will contribute $3 billion from its assets to the new company, called Doha Global Investment. The new fund will seek to raise $3 billion in a share sale to Qatari nationals, Aladdin Hangari, head of adviser Credit Suisse Group AG in Qatar, said in Doha today. The aim is for the initial public offering to happen in May or June, Ahmad Mohamed Al-Sayed, Qatar Holding’s chief executive officer, said in a telephone interview with reporters.

“The main purpose of this company is to bring the Qatari private sector the opportunity to enjoy the access that Qatar Holding has,” Al Sayed said.

The Persian Gulf nation is snapping up assets across the globe as it seeks to reduce its energy dependency. Qatar Holding agreed with Credit Suisse in November to form asset manager Aventicum Capital Management to boost investments in emerging markets. The joint venture, overseen by Hangari, will operate out of two hubs including a Doha-based unit focused on the Middle East, Turkey and other emerging markets. The Zurich-based bank is helping Qatar set up the new fund.

Range of Assets

The new company is being created “basically to allow the private sector to participate in interesting investment opportunities across the world,” Hangari said. “Its independent and makes its own decisions. It doesn’t have to follow Qatar Holding. Qatar Holding can show it opportunities but the company will decide to invest or not to invest.”

The fund will invest in a range of assets including real estate, bonds and equities and pay a dividend of at least 5 percent in its first year, Hussain Al Abdulla, board member at the sovereign wealth fund, the Qatar Investment Authority, said at a press conference today.

The management of the company will be decided at a later date, Al Sayed said in today’s phone call. While the public offering will only be open to Qataris, Al Sayed said he didn’t yet know if foreign investors would be allowed to invest in the company later on the secondary market.

‘Flexing Muscles’

“Qatar is increasingly flexing its muscles both in the region and on the global stage,” Gus Chehayeb, research director for the Middle East and North Africa at Exotix Ltd, said today in e-mailed comments. The fund’s creation is “in line with the country’s strategy of diversifying its assets from energy and the Middle East, while at the same time extending its influence and brand,” he said.

The fund is being created as economic growth picks up after much of Europe fell into a recession last year and the Chinese economy advanced at its slowest pace since 1999, according to International Monetary Fund data. World economic growth will be

4.1 percent this year, up from 3.6 percent last year, according to the IMF.

Economic expansion and high oil prices are driving prosperity in the Middle East, boosting demand for wealth and asset management services.

Qatar Economy

Qatar’s economy, which has the highest per capita income in the world, advanced at rates of more than 10 percent from 2009 to 2011 as it expanded liquefied gas exports, according to IMF data. Growth slowed after the country started its 14th and final gas liquefaction plant in 2011, with the economy set to expand

4.8 percent this year, down from 6.3 percent in 2012, according to the country’s General Secretariat for Development Planning.

Qatar Holding, the foreign investment arm of the Qatar Investment Authority, earned a 17 percent return on its investments last year, Al Abdullah said today. The fund owns stakes in companies including Barclays Plc, Volkswagen AG, Xstrata Plc and Credit Suisse. The fund bought Harrods Department Store Co in London in 2010.

(Updates with Qatar Holding CEO comment in third, seventh paragraphs.)
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