Qatar Investment Authority Wikileaked

Ashby Monk

The Qatar Investment Authority is perhaps the most active and strategically oriented SWF in the world today. In short, it’s one of the most interesting SWFs I track. So you can imagine my reaction at seeing a new Wiki-leaked cable (09DOHA691) from 2009 detailing a conversation between US Ambassador Joseph E. LeBaron and QIA Executive Board Member Dr. Hussain Al-Abdulla. Now, there isn’t actually anything too revealing in the document. But, the (one-sided interpretation of the) conversation between the Ambassador and the Executive Director is still fascinating, as it focused almost exclusively on the Qatari SWF’s long-term investment strategy. As such, the cable offers a unique opportunity to gain some additional insights into the QIA’s operations and motivations. Some of the highlights:

Here’s an explanation for why the QIA (which is funded out of commodities) has been doubling down on commodity investments around the world:

“The first area of the QIA’s investment efforts will be the commodities sector.  Ambassador asked Al-Abdulla if he could be more specific, to which he replied that the QIA is interested in all types of commodities – oil, gas, gold, silver, and agricultural products.  He shared his view that a structural change is underway in the commodities sector, strongly suggesting long-term price increases.  The growth in the middle class of emerging countries such as China and India, for example, suggests higher food prices over the long term.”

Here are some additional insights into the QIA’s recent strategic investments:

“In 2010 the QIA will also focus on business acquisition.  It will seek to acquire businesses with good management and good products, but which have cash flow problems.  “We are not interested in distressed assets or distressed debt.  We are interested in distressed sellers”, Al-Abdulla said.

See Harrods, Paris Saint-Germaine Football club, Banco Santander Brazil, and the Agricultural Bank of China for details on this approach.

Finally, here’s an explanation for the QIA’s focus on real estate:

“The third part of the QIA’s investment strategy will be in the real estate sector.  Al-Abdulla said that the QIA has not yet begun investing heavily in real estate assets, because it believes that prices will go lower through the first half of 2010…Ambassador asked Dr. Al-Abdulla to go into more detail concerning the types of real estate assets the QIA was looking to acquire, and in what areas of the world. Al-Abdulla explained that the QIA was looking for prime commercial real estate, and expects QIA’s best opportunities to be in the U.S. and Europe.  He observed that East Asia real estate has become too expensive; there are no bargains there.  He noted, however, that the QIA was in search of value, and that price alone would not be the determining factor in its investment decisions.”

In sum, there’s nothing really damaging in the cable; I’d even say the QIA comes off looking quite good in the Ambassador’s write-up. And, moreover, I think we can assume that follow-up conversations went quite well between the two parties, as the SWF would later make a big investment in Washington DC real estate. (In fact, one also has to wonder if the US Ambassador was giving out investment tips during his meetings with the QIA…)

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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