(The author is a Reuters Breakingviews columnist. The opinions
expressed are her own.)
(Refiles to fix location in dateline)
By Una Galani
DUBAI, Feb 19 (Reuters Breakingviews) - Qatar’s sovereign
wealth fund may regret spinning off part of its business. The
Gulf emirate known for snapping up high-profile stakes in
publicly listed entities is giving ordinary investors a chance
to get a piece of the action. That, though, opens up the
absolute monarchy to one risk it loathes: public criticism.
Doha Global Investment, as the new fund is called, is
Qatar’s latest asset-management foray – the sovereign fund has
smaller joint ventures with Credit Suisse CSGN.VX and Barclays
(BARC.L). Doha Global creates a new channel to redistribute
Qatar’s hydrocarbon wealth as well as boost liquidity on the
local exchange. And by partnering with Qatar Holding, which will
seed the fund with $3 billion, it should have access to the
world’s best investment opportunities.
So far, so good. But the aim is to match Qatar Holding’s
stake with another $3 billion from Qatari nationals by a public
stock offering. Foreign investors will also be allowed to buy a
limited number of shares, probably once the fund goes looking
for another $6 billion.
Bringing in such outside capital means Doha Global’s
executives will have to answer to shareholders. They will also
be held accountable to a board of directors, half of them from
the private sector.
That’s far more scrutiny than Qatar’s investment fund – or
its monarchy – is accustomed to and may cramp its style.
Sovereign funds do well because they can move quickly, take big
risks and adopt a long-term outlook. That may be harder to do
with public shareholders and a board.
It has already succumbed to setting a target - Qatar is
promising that Doha will pay a 5 percent dividend in the first
year. Qatar is a shrewd dealmaker and claims to have delivered a
17 percent return last year. But its performance has been
boosted in recent years thanks in part to making timely
investments in distressed targets.
Generating such profit may be harder as markets recover -
and any losses or controversies will be subject to public
scrutiny. This new fund won’t allow Qatar to decide when to step
out of the shadows.
SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS:
- Qatar will create a $12 billion investment firm and list
it on the local stock exchange, the country’s sovereign fund
said on Feb. 19. The fund will be called Doha Global Investment.
- Qatar Holding - the investment arm of the Qatari sovereign
fund - said the new firm will invest in assets in any sector
around the world.
- "You name it - shares, bonds, real estate, private equity.
We will look at every sector in every country around the world,"
Hussain al-Abdullah, Qatar Holding's vice chairman, said at a
- The sovereign fund generated a rate of return of 17
percent last year, Abdullah added.
- Qatar Holding will transfer $3 billion-worth of assets
into the new firm, with a similar amount raised in an initial
public offering on the Qatar Exchange. A further $6 billion will
be raised at a later date.
- Qatar Holding will own 50 percent of the fund, with the
rest floated on the stock exchange. The firm will have a
nine-member board, including a chairman.
- Reuters: Qatar to list $12 bln firm with assets from
wealth fund [ID:nL6N0BJ6S8]
- For previous columns by the author, Reuters customers can
click on [GALANI/]
(Editing by Antony Currie and Emily Plucinak)
Keywords: BREAKINGVIEWS QATAR/
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