Making a splash: Significant overseas investments have been drawing attention

Recent years have seen Qatar become much more widely known internationally as an important global investor, with stakes in businesses that stretch from Harrods and Barclays to Volkswagen and Tiffany & Co. The years ahead are likely to see this role continue to expand, as Qatari businesses and agencies look for destinations overseas to place their growing wealth, while the government works to expand its soft power on the global stage.

Good Returns

The main institution making these overseas forays is the Qatar Investment Authority (QIA), the country’s sovereign wealth fund. It was set up in 2005 to help manage the burgeoning surpluses that were resulting from the oil and – particularly – natural gas sectors. The authority was given responsibility for investing some of this wealth outside of the country, focusing on assets such as equities, fixed-income instruments and private equity, in addition to making direct investments.

In this way, the QIA helps fulfil the long-term strategy of the Qatari government, which is to diversify the country’s sources of income away from reliance on hydrocarbons. The aim is to be able to balance the state budget by 2020 with revenue entirely derived from the non-hydrocarbons sector. In this, returns from overseas investments will be key.

Several other organisations are associated with the QIA, such as Qatari Diar, a property investment firm set up by the QIA in 2005, and Qatar Holding (QH), a global investment house founded by the QIA in 2006. Qatari Diar has since made major investments in real estate in London, where its largest current project is the redevelopment of Chelsea Barracks. The company is also active in Switzerland, where it is redeveloping Burgenstock Resort, and in hotels in France, Italy, Spain, Morocco, Montenegro and Sudan, among others. Qatari Diar also has significant investments in Central Asia, North Africa and even Cuba.

QH, meanwhile, has items in its portfolio from over 30 different countries. These include significant shares in Volkswagen, Glencore Xstrata, Spain’s Iberdrola, Russia’s VTB, Credit Suisse (with which it runs an asset management company, Aventicum), Germany’s Hochtief, Heathrow Airport Holdings, Canary Wharf, the Shard, Sainsbury’s and, since November 2013, Blackberry, among many others.

In 2013 QH also joined with Qatar Petroleum International (QPI) – the state energy giant’s foreign investment arm – and state utilities firm Qatar Electricity and Water Company to set up a $1bn foreign power and water investment outfit, Nebras.

New Strategy

Earlier in 2013 QH introduced a new strategy, with the $12bn Doha Global Investment fund. This is half funded by QH, with the other half available for private investors to take a stake and thus enjoy the benefits derived from QH’s global weight.

An initial public offering was scheduled for Doha Global Investment in mid-2013, but then delayed to await more appropriate market conditions.

Such a fund – and debate over whether QH itself will seek a credit rating – might open the door to the real extent of QH’s portfolio too, with data on this giant fund generally out of the public eye.

Overseas Investment

Other Qatari companies have been major overseas investors in recent years.

Fixed and mobile telecoms operator Ooredoo owns telecoms firms in several countries, principally operating in Qatar, Indonesia, Kuwait, Iraq, Algeria, Tunisia and Oman. Barwa Real Estate owns hotels in Switzerland, Belgium and Luxembourg, while QPI has assets in the Middle East, Singapore, China and Africa.

These activities have helped raise Qatar’s global profile, as well as providing the country with extensive overseas revenues. The QIA has been able to manoeuvre rapidly in recent years to expand its portfolio at a time of global liquidity issues, playing a significant role in restoring international confidence.

Now, with the new Emir a long-time head of QIA, these overseas investments are likely to continue to be a major source of international financial news.