LSE – Qatar sovereign wealth fund plans Asia push to diversify from Europe, US, Economy News & Top Stories

DOHA (BLOOMBERG) – Qatar’s sovereign wealth fund is looking east for deals in an effort to diversify an investment portfolio heavily weighted toward North America and Europe.

Asia “has been very much on our radar screen,” Foreign Minister Sheikh Mohammed bin Abdulrahman Al Thani said in an interview with Bloomberg TV.

Sheikh Mohammed is also chairman of the Qatar Investment Authority, which manages about US$300 billion (S$399 billion) of assets and ranks as the world’s 11th-largest wealth fund, according to the Sovereign Wealth Fund Institute.

“It’s not only from a growth perspective, but also from a diversification perspective,” he said, pointing to substantial investments in Europe over the past decade. “Asia didn’t take the fair portion of the investments,” although North American deals will remain a priority.

QIA’s chairman declined to identify specific targets, mentioning only a list of locations such as India, Malaysia, Singapore, and China.

“We’ve been doing a lot of investments in the last couple years in China, and they’ve been doing very well,” he said.

The wealth fund holds stakes in some of the world’s top companies including London Stock Exchange Group, Volkswagen and Glencore. It agreed to purchase a 30 per cent stake in a high-end Istanbul shopping centre toward the end of last year, while also agreeing to develop renewable energy in Africa with Italian utility Enel.

Meanwhile, China’s US$1 trillion sovereign wealth fund is restructuring how it decides on international investments as it tries to boost efficiency and make better progress on a goal of increasing the share of private assets in its global portfolio.

China Investment Corp (CIC) formed two committees earlier this month to approve investments in public and non-public assets, replacing bodies at units CIC International and CIC Capital that previously had overlapping responsibility for the process, according to people familiar with the matter. The new structure for overseas investing should provide a clearer mechanism to implement asset allocation strategies.

The change will help CIC lift direct and alternative investments to half of a global portfolio worth more than US$300 billion by the end of next year, a target set in 2018. The fund’s efforts to limit exposure to volatile public markets have been complicated by market rallies that led to an increase in the value of its holdings of bonds and stock. The pandemic and a rise in protectionism also made private deals more difficult.

Alternative assets dropped by 2 percentage points to about 42 per cent by the end of 2019, reversing an increase from the previous year, according to the most recent available data.

The fund’s long-term goal has been to expand non-public investments including in private equity, real estate and hedge funds for more stable returns. Stocks and bonds were the company’s main investments in the early years after its 2007 inception. Alternative assets accounted for only 6 per cent in 2009.

CIC Capital was set up in 2015 to boost direct investments, while CIC International ran other assets including public stocks and bonds, real estate and private equity. CIC Capital had its own investment committee and hoped to boost its capital to as much as US$100 billion through bond sales. The fundraising plans have made little progress.