Qatar and Abu Dhabi SWFs Agree to Start Joint $2 Billion Acquisition Fund

By Mike Caggeso
Associate Editor

The sovereign wealth funds of Qatar and Abu Dhabi, a United Arab Emirates state, have agreed to start up a $2 billion joint fund that will finance oil and petrochemical acquisitions.

Qatar Investment Authority (QIA) and Abu Dhabi's International Petroleum Investment Co. (IPIC) will each ante up $1 billion for the new fund, which will begin investing in "about September," Reuters reported.

"Both Qatar and the United Arab Emirates are focused on the long-term growth of our states... leveraging our combined investment expertise, we will target attractive opportunities on a global basis," Qatar Investment Authority Executive Board Member Hussain al-Abdulla said in a statement Thursday.

Abu Dhabi's sovereign wealth fund holds about $875 billion in assets, The Economist reported, easily topping the list of largest sovereign wealth funds in the world. The emirate controls more than 90% of the U.A.E.'s oil reserves.

Qatar's sovereign wealth fund is worth about $50 billion.

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Last year, QIA set up two $1 billion joint funds with Indonesia and emirate state Dubai.

Dubai Banking on U.S. Investments

Also yesterday (Thursday), the chief executive of Dubai Group, an investment firm owned by the ruler of Dubai, said he expects sovereign wealth funds to invest more in the struggling financial firms in the United States and Europe.

"People are really sensitive to it right now but I think that apprehension will start to disappear over a period of time. Sovereign wealth fund money will continue to flow to the [United States] and Europe in the coming years, as financial institutions will continue to need liquidity," Tom Volpe, Dubai Group chief executive officer told Emirates Business.

"Most financial institutions in the West, not just in the [United States], that are looking for capital tend to look at the Middle East. If you are looking for capital then it is the place you have to come to, which is very different from five or 10 years ago," he said.

Emirates Business is also owned by Dubai's ruler, Sheikh Mohammed bin Rashid al- Maktoum.

In the interview, Volpe said Dubai Group is targeting returns in the 20%-plus range for its intended investment areas in 2008 – financial services, private equity, investment banking and exchange business.

Money Morning has extensively covered the many moves, motives and transactions of the world's largest sovereign wealth funds (dubbed Global Cash Barons), including: Russia, Abu Dhabi, Dubai, China, Singapore, Qatar.

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