Qatar’s sovereign wealth fund plans to expand in the UK and the US, as top officials said long-term commercial opportunities would outweigh political uncertainty roiling the two countries.
Qatar will add £5bn ($6.3bn) to its UK portfolio in the next three to five years, and will set up an office soon in San Francisco – its second in the US after New York. The focus will be on infrastructure, technology, healthcare and real estate, they said.
The plans were announced on Monday in London, and the investments could help signal that the UK remains an attractive destination for foreign capital even after it leaves the European Union. Prime Minister Theresa May is set to begin the two-year clock on Brexit negotiations today.
“We look at our investments purely on a commercial basis,” HE the Finance Minister Ali Sherif al-Emadi told Bloomberg Television in an interview, responding to a question on whether turbulent Brexit talks would change Qatar’s view. “We were heavily investing in the UK and Europe during the financial crisis. Most of our investments are very much long-term.”
Qatar, the world’s biggest exporter of liquefied natural gas, is already a major investor on both sides of the Atlantic. It has assets valued at more than £35bn in the UK, including London landmarks such as the Harrods department store, The Savoy hotel and the Shard skyscraper. The Qatar Investment Authority has also invested more than 60% of the $35bn it has dedicated to the US.
“Qatar realises that due to its large capital base and relative small size of its economy, there are constraints to what it can do inside the country,” said John Sfakianakis, director of economic research at the Gulf Research Center Foundation in Riyadh. “It makes sense to invest in countries that will produce long-lasting and stable returns.”
More than 400 Qatari officials and executives were in the UK for the two-day investment forum, led by HE the Prime Minister and Minister of Interior Sheikh Abdullah bin Nasser bin Khalifa al-Thani, as well as bankers from the some of the world’s top financial institutions.
Qatar has a stake in keeping the UK economy and asset prices strong during and after Brexit. It delivers 90% of the UK’s imports of the fuel. The emirate invested billions in Barclays during the global financial crisis and has built up a stock and real estate portfolio over the past decade.
In a frank assessment of the uncertainty facing the UK due to Brexit, QIA chief executive officer HE Sheikh Abdullah bin Mohamed bin Saud al-Thani said, “If you ask anyone here, they won’t have any clue at what’s happening in this economy.”
Yet he said the wealth fund still agreed to commit “a big amount of investment in the UK, especially in infrastructure” during its last strategy session.
Al-Emadi, said the QIA and its units were also looking at opportunities in UK property, technology as well as energy, and dismissed the impact of the weakening pound on his country’s investments.
“Since we’re not trading in our portfolio, it’s always going to be an accounting adjustment,” he said. “If we look at what we’ve been holding in the last 10 years, we still have the same assets as of today and I don’t think we’re going to give up these assets” anytime soon, he added.
He also said his country would encourage any talks between the US and the six-member Gulf Co-operation Council, which includes Qatar, to establish a free trade agreement after Brexit.
Monday’s announcement would maintain the UK’s status as Qatar’s top investment destination even as the QIA considers expanding in the US. The fund will open an office in San Francisco by the end of this year or the first quarter of next, its CEO Sheikh Abdullah told reporters.
Al-Emadi said Qatar’s investments in the US are “really ahead of schedule.”
“The US market has done extremely well, especially after Trump’s election,” he said. “But the way we are look at this is more about the US economic and financial policies.”
The $335bn sovereign wealth fund, created in 2005 to handle the country’s windfall from liquefied natural gas, has stepped up the pace of investments as energy prices recovered, buying stakes in Turkey’s biggest poultry producer, Russian oil giant Rosneft and UK energy company National Grid.
Qatar is also weighing whether to invest in a $100bn global technology fund formed by SoftBank Group Corp. Page 16
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