Qatar’s Glencore Kingmaker Breaks Exile in Deutsche DealAlaa Shahine and Robert Tuttle
Sheikh Hamad bin Jassim bin Jabr Al Thani, who played a key role in Glencore International Plc’s takeover of Xstrata Plc, is returning to dealmaking a year after his ouster as prime minister and head of Qatar’s sovereign wealth fund.
Sheikh Hamad is injecting 1.75 billion euros ($2.4 billion) into Deutsche Bank AG through his Paramount Holdings Services Ltd. investment vehicle, the Frankfurt-based bank said May 18. That follows an offer by his Al Mirqab Capital SPC vehicle for Jersey-based Heritage Oil Plc. less than three weeks earlier.
After taking what he called a “year of rest” since leaving office, Sheikh Hamad is back as a private investor, hunting for acquisitions such as the investments in Barclays Plc and Total SA he helped oversee as head of Qatar’s $100 billion wealth fund. The country’s investment abroad averaged $60 billion a year between 2008 and 2012, the International Monetary Fund said last year.
“Much of what we saw from Qatar’s sovereign wealth fund in the past decade was due to Sheikh Hamad’s business acumen,” Theodore Karasik, a political analyst and director of research at the Institute for Near East and Gulf Military Analysis in Dubai, said in a telephone interview yesterday. “In the near future, we’ll see more and more activity by him.”
A long-time civil servant, Sheikh Hamad became prime minister in 2007. He was replaced by the minister of state for internal affairs in June, when then-Emir Sheikh Hamad bin Khalifa Al Thani handed over power to his son, Sheikh Tamim bin Hamad Al Thani.
During the outgoing ruler’s 18-year reign, Sheikh Hamad, 55, helped transform Qatar from an indebted emirate to the world’s richest state, capitalizing on liquefied natural gas exports.
The former premier also pursued a foreign policy that saw Qatar hand out billions of dollars to Islamist groups in the Middle East, including Egypt’s Muslim Brotherhood, provoking the ire of some neighboring countries. The dispute escalated when Saudi Arabia, the United Arab Emirates and Bahrain withdrew their envoys from Doha this year.
In an interview with Charlie Rose aired on May 14, Sheikh Hamad said the abdication of power was planned several years in advance and is allowing him to pursue his personal business.
“I am rich enough to live a good life,” he said. “My father was a merchant and a landlord and did a lot of business during his time. I did a lot of business before I joined and after I joined the government,” he told the U.S. broadcaster.
That private wealth, now being deployed into similar banking and commodities investments as during the wealth fund years, is considerable. His yacht, Named Al Mirqab, is one of the world’s biggest at 133 meters (436 feet) long. In 2007 he paid a then-record 100 million pounds for a 20,000 square-foot penthouse London apartment, according to the London-based Times.
Deutsche Bank was also one of the advisers to Sheikh Hamad on his offer to acquire Heritage Oil in April. QInvest LLC, a unit of Qatar Islamic Bank SAQ, also advised on the deal, according to filings to the London Stock Exchange in April.
Sheikh Hamad completed the deal to buy 60 million Deutsche Bank shares without hiring an external advisor, a person with knowledge of the transaction said, asking not to be identified as the details aren’t public.
A phone message at International Bank of Qatar, a lender chaired by Sheikh Hamad, wasn’t returned and a call to al-Mirqab Capital wasn’t answered. The Qatar Investment Authority declined to comment.
Sheikh Hamad left office amid speculation the new government had different priorities. Under Prince Tamim, it’s scaling down the $200 billion program to upgrade the country’s infrastructure before hosting the soccer World Cup in 2022. Authorities last month reduced the number of stadiums they plan to build for the event to eight from 12.
The sovereign wealth fund may also be moving away from the “flashy” deals that marked Sheikh Hamad’s reign, according to Wael Ziada, head of research at Cairo-based investment bank EFG-Hermes Holding SAE.
With Sheikh Hamad’s exit, Qatar Investment Authority lost a “key person,” Ahmed Shehada, head of the advisory and institutional desk at National Bank of Abu Dhabi Securities, said in a telephone interview. “Obviously, he is a person with vast experience, vast network connections.”
As premier he helped push Glencore to sweeten its offer for Xstrata Plc in September 2012. The deal took shape after a late-night negotiating session at London’s Claridge’s Hotel with Clencore’s Chief Executive Officer Ivan Glasenberg and former U.K. Prime Minister Tony Blair, a senior adviser to JPMorgan Chase & Co., which was advising Xstrata.
The fund also became the second-largest shareholder in Barclays and Credit Suisse after investing billions during the financial crisis, and invested in luxury European real estate.
“The frequency of the acquisitions may have not slowed but the size has been scaled down,” Ziada said in a phone interview. While the country still has enough surplus revenue to pursue overseas acquisitions “one has to question the willingness to do this with the new leadership,” he said.
In the Charlie Rose interview, Sheikh Hamad, who made the Deutsche Bank investment as part of an 8 billion-euro fundraising exercise by the bank, said the new emir was “doing a good job” almost a year after taking power, dismissing suggestions of a dispute with the new leaders.
Deutsche Bank fell 1.7 percent to 30.20 euros yesterday in Frankfurt, the lowest since April 22 last year.
For Michael Stephens, a researcher at the Royal United Services Institute in Doha, Sheikh Hamad will be free to pursue his business interests as long as Qatar’s new leaders don’t think he is after political gains.
‘He is a very wealthy individual with a lot of deal-making experience,’’ he said. “And while the QIA may not be making these big bailout style deals anymore, he still has the capacity to do so.”