Qatar investment fund ‘in emerging markets push’

By Mirna Sleiman

Doha/Reuters

Qatar’s sovereign wealth fund is looking at more investments in emerging markets in order to diversify beyond developed nations, said a senior executive of Credit Suisse who is one of the top advisers to the fund.

With assets estimated by analysts at about $100-200bn, and over a dozen potential deals on its radar every week, Qatar Investment Authority (QIA) is courted by bankers and politicians around the world.

While the fund will continue to take large minority stakes in well-established firms, it may in future place more emphasis on tangible assets such as real estate, infrastructure and commodities rather than merely financial instruments, said Aladdin Hangari, head of Credit Suisse’s Qatar operations.

 “For a sovereign wealth fund, that’s investing for future generations, it makes sense to go for assets that are income-producing and can act as a good inflation hedge for the future,” he said in an interview for the Reuters Middle East Investment Summit.

 “They tend to do more in Europe and the US because they’re more familiar with the legal framework, which makes it easier to do things. I think going forward, we’ll see them doing more in emerging markets as long as they find the right opportunities.”

Qatar Holding, the investment arm of the wealth fund, has in recent years deployed the country’s natural gas wealth to buy a string of high-profile stakes in the West, from German sports car maker Porsche to British bank Barclays and Swiss lender Credit Suisse.

 But in a sign of an increased focus on emerging markets, the fund hired Michael Cho, a Hong Kong-based banker, as head of mergers and acquisitions in August. The veteran Merrill Lynch banker filled a post vacant since 2011.

Deven Karnik, another Asia-based banker who was previously with Morgan Stanley, joined in April to run a newly-formed infrastructure team.

QIA is the second-largest shareholder in Credit Suisse with a 6.2% stake, and the Swiss bank has landed advisory roles on some of the fund’s most high-profile investments.

Hangari, who is one of the closest bankers to the fund and has advised it on a number of deals, does not see any major impact on business from the power transfer in Qatar. In June, HH Sheikh Tamim bin Hamad al-Thani became Emir as his father, HH Sheikh Hamad bin Khalifa al-Thani, handed over power.

“My feeling is that there will not be a major change in Qatar’s economic policy and investment strategy. Qatar, with the surpluses that they have, will continue to invest abroad like they’ve been doing during the past few years,” Hangari said.

Credit Suisse in Qatar owns an asset management venture with Qatar Holding named Aventicum Capital Management. The firm plans to launch a second Middle East and North Africa (Mena) fund before the end of this year, Hangari said.

 The long-short fund is planned to be “multi-asset but will invest predominantly in equities and equity derivatives in Mena, Turkey and other frontier markets”, the executive said.

 The venture launched its first flagship, long-only equities fund, which invests in the Mena region, in 2012. The asset management firm is owned 40% by Qatar Holding, while Credit Suisse owns the rest.

 “Post-launch at the end of 2013, the venture is expected to have $250-300mn of assets under management,” Hangari said.