Kuwait Plans $100 Billion Sovereign Fund, Al-Anba Reports

  • New fund to include stakes in local companies, utilities
  • Kuwait's larger fund to focus on international portfolio

Kuwait plans a new state-owned fund to manage as much as $100 billion in local assets with the goal of selling them to private investors in five to seven years, Al-Anba newspaper reported.

The new sovereign wealth fund will include local assets managed by Kuwait Investment Authority, which has been burdened by its domestic mandate and will focus more on its international portfolio, Al-Anba reported, citing unidentified officials. Stakes in local companies, as well as power and water projects, will be included in the new fund, it said.

A slump in oil is prompting energy producers across the Middle East to consider savings and project delays as they grapple with crude’s descent to near a 12 year low. Saudi Arabia’s net foreign assets dropped to $640 billion in October, the lowest level in three years, while Kuwaiti Finance Minister Anas Al-Saleh has raised the prospect of introducing income, corporate and sales taxes to compensate for lost oil revenue.

Kuwait’s plan to privatize utilities while removing domestic energy subsidies is intended to make its power and water assets more profitable for the fund and attractive to potential investors, according to Al-Anba.

Saudi Arabia is also planning to set up a new sovereign wealth fund to manage part of its oil fortune and diversify its investments, Reuters reported earlier this month. The nation is seeking proposals from investment banks and consultants, the news service reported, citing unidentified people familiar with the matter. The fund may focus on businesses outside the energy industry, such as chemicals and transportation, and may be active within one to two years with an office in New York, Reuters reported.

Energy-exporting countries that amassed large financial reserves over a decade-long oil boom are exacerbating a collapse in asset prices by selling off holdings to meet their obligations, according to Jefferies LLC. Such nations are also shifting investment strategies with an eye on boosting returns.

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