Tags: Outlook 2008, William Patalon III

Outlook 2008: Three Ways to Profit From Sovereign Wealth Funds - the "Next Wall Street"

By , Executive Editor, Money Morning •

William Patalon IIIWilliam Patalon III

By William Patalon III
Executive Editor
Money Morning/The Money Map Report

Editor's Note: This is the 18th Installment of an Ongoing Series Highlighting the Global Investing Outlook for 2008.

A year ago at this time, few investors had ever heard the term "sovereign wealth fund."

But now these government-controlled investment pools are making headlines virtually every day, and their cash is surfacing in deals of almost every type. Most recently, the funds have provided bailout capital to the likes of Citigroup Inc. (C), Merrill Lynch & Co. Inc. (MER), UBS AG (UBS), and Morgan Stanley (MS) - financial-sector heavyweights whose balance sheets have been eviscerated by the subprime-spawned credit crisis.

In doing so, these massive cash pools are highlighting potential turnaround plays for investors.

"Sovereign wealth funds provide an important data point for investors," says Money Morning Investment Director Keith Fitz-Gerald. Despite what critics say, "sovereign funds operate out in the open, and their objectives become very clear. This is in stark contrast to the secret workings of hedge funds, that operate in private, and only divulge their holdings and objectives after the fact."

In the political arena - especially in Washington - these multi-billion-deals have transformed sovereign wealth funds into a topic of controversy. On Wall Street, these deals have made the funds an object of fear and uncertainty.

The New Robber Barons?

Here at Money Morning, we're referring to sovereign wealth funds as "Global Cash Barons." By bringing their huge hordes of cash to bear on the financial problems of the day, the sovereign Cash Barons are - in a way - the modern manifestation of the 19th Century Robber Barons, the so-called "Captains of Industry" that novelist and philosopher Ayn Rand described as being among the "greatest benefactors of mankind … because they had brought the 'greatest good' and an impossible standard of living - impossible by all historical trends - to the country in which they functioned."

Call them sovereign wealth funds or Global Cash Barons, but the bottom line is this: The investments that these massive cash pools make over the next 12 months will be some of the biggest profit opportunities investors will find. Shrewd individual investors would do well to closely watch the moves they make - and follow suit wherever possible.

Wall Street, long the flagship of global capitalism, is being usurped by these state-controlled Cash Barons. These funds have been around since the 1950s, but they've become much more active of late - and it's that increased activity that's caused controversy.

The governments of such countries as Dubai, Saudi Arabia, China, Russia and Norway operate the big investment pools - and more are on the way. The capital was amassed chiefly through crude oil sales, although China started its fund with some of the estimated $1.3 trillion in foreign reserves it amassed from the massive trade surpluses it routinely runs.

The richest sovereign funds include the Abu Dhabi Investment Authority, or AIDA ($875 billion), the Government of Singapore Investment Corp. ($330 billion), and Norway's Government Pension Fund Global, or GPFG ($322 billion), although several others may be larger [See the sidebar, "The Richest Cash Barons," at the end of this report.]

Some of the world's top sovereign wealth funds include Singapore's Temasek Holdings Pte. Ltd., Mainland China's China Investment Corp., and Dubai's Dubai International Corp.

New funds have been announced in recent months.

Many of these Cash Barons are looking for more than just an investment return: They are seeking the deal-making know-how that over time will transform them into global financial titans. That quest induced the China-controlled State Foreign Exchange Investment Co. to invest $3 billion in private-equity whiz, The Blackstone Group LP (BX) back in April. The funds often take passive stakes, meaning they don't demand management say-so and don't seek seats on the target company's board of directors.

The Next Wall Street?

But their ultimate objective could well be to enable them to one day unseat Wall Street as the deal-making Mecca of the capitalist world.

It could happen.

Sovereign wealth funds currently control an estimated $3 trillion. That's already believed to be more than the $1.5 trillion to $2 trillion held by worldwide hedge funds [though some sources put the hedge-fund estimate as high as $5 trillion].

The International Monetary Fund (IMF) and other experts predict the state-run venture funds could control $12 trillion by 2015. But Money Morning's Fitz-Gerald thinks the ultimate total will actually be much bigger: Even now, he estimates that the total capital under the control of the global Cash Barons is more likely to reach $20 trillion by the middle of the next decade.

The growth rate is certainly accelerating. The U.S. Treasury says that 20 new funds have been created since 2000 - more than half of them since 2005 - bringing the total to nearly 40 funds with total assets between $1.9 trillion and $2.9 trillion.

If that happens, no matter which estimate proves the most accurate, it's clear the state-run funds will be major financial forces in the world economy in just a few short years. For some context, consider that the estimated U.S. gross domestic product for 2006 was only slightly more than $13 trillion.

Fueling Angst

In recent months, these Cash Barons have injected more than $70 billion into struggling commercial banks, brokerages and investment-banking institutions - most of them in the West.

In many cases - Citigroup being an excellent example - sovereign funds have snapped up prime U.S. assets with terrific long-term futures at near-term bargain prices.

Add to that the fact that China - with its $1.3 trillion in foreign-exchange reserves - holds several hundred billion dollars of U.S. government debt, and it's enough to cause considerable angst among Americans who believe that foreign governments are methodically placing themselves in a position of considerable potential influence.

That growing angst hasn't gone unnoticed - by the governments that operate the funds, or the governments that oppose them.

In October, finance ministers and central bankers from the Group of Seven industrialized nations called for rules to guide international investments of government-run funds. But the G-7 officials weren't advocating such rules out of fear of the funds or their motives - many of these countries operate funds themselves and were calling for the rules to head off a protectionist reaction to the funds' perceived lack of transparency.

In December, U.S. Securities and Exchange Commission Chairman Christopher Cox said the growth of these state-directed funds may lead to an upsurge in political corruption because governments might attempt to exert influence over the companies or markets they've invested in.

And yet, banking companies worldwide need the capital - especially in the United States, where the subprime-mortgage debacle has badly mauled the leading players in the commercial banking, mortgage-lending, investment-banking and brokerage sectors. The question is: Without sovereign-wealth capital, where would the U.S. economy be right now?

That quandary seems to sum up the schizophrenic viewpoint most Americans have about sovereign wealth funds.

"They don't like us, but they need our money," Kristin Halvorsen, finance minister of Norway, told Forbes magazine recently.

Norway's sovereign wealth fund - recently described as a "model of rectitude" - has an investment of more than $300 billion spread across 700 companies, though it's avoided the banking-bailout deals that are so popular with the Cash Barons of Asia and the Middle East.

One problem has been the lack of transparency: Sovereign funds have been notoriously loathe to reveal their holdings, which contradicts the basic nature of the U.S. financial system, where disclosure is a key tenet. Some of the funds are starting to be more forthcoming about their investments, and their alleged intent.

"Sovereign wealth funds, until recently, had a very bad reputation," says Stephen Jen, the chief currency strategist at Morgan Stanley, the U.S. investment bank that made a study of sovereign funds - and accepted an investment from one, too. "But there was no rebuttal. They said very little in their own defense. But going into a sector [like the U.S. financial-services sector] that is in desperate need of assistance is a form of rebuttal. They are refuting the notion that sovereign wealth funds are going to be a source of volatility, of uncertainty, or that they will disturb the market. What they have done is anything but."

In December, after booking $9.4 billion of write-downs on its way to a fourth-quarter loss, Morgan Stanley said it had sold a stake in itself to China Investment Corp. for $5 billion.

New Players to Debut

In late December, in a move that underscores the growing global importance of state-run investment pools, Saudi Arabia announced plans to establish a sovereign wealth fund that would eclipse Abu Dhabi's multi-faceted $900 billion venture to become the largest in the world.

The new Saudi sovereign venture will probably be created and managed by the Saudi Arabia Public Investment Fund, which up until now has been limited to internal investments, The Financial Times reported. Previously, that country's oil-generated wealth had been apportioned among the Saudi kingdom's central bank, Saudi Arabian Monetary Agency, also known as SAMA, and partly into the personal coffers of the nation's ruling family, the international financial newspaper reported.

This new fund will represent a major shift in the investment policy of SAMA, which, up to now, had been limited to conservative stocks and bonds, especially U.S. Treasuries.
Interestingly, while SAMA's balance sheet is public information, banking-sector insiders in the region say that those figures portray only a sliver of Saudi Arabia's actual wealth. The reason: The royal family has stakes in scores of investment vehicles, most of which are not known.

Contrast that with Saudi Arabia's Persian Gulf peers, which have increasingly shifted their investment strategies to prepare for the day when the region's oil reserves run dry:
These other countries have been investing in such alternative investments as high-risk hedge funds and other alternative investments. What's more, as recent news reports underscore, these venture funds are increasingly taking direct stakes in major corporations - especially financial-service firms.

Unlike its peers in the Gulf, Saudi Arabia has expanded its spending and its budget for 2008 includes spending for important infrastructure projects, the Financial Times reported.

Abu Dhabi is one of the seven emirates that make up the United Arab Emirates. It, along with its neighbors Qatar and Dubai, have been making serious investments in many markets around the world, increasing their foothold as the financial epicenter of the Middle East and diversifying their revenues beyond their vast oil reserves.

India also is looking to start a sovereign fund of its own.

As long as investors understand that the Cash Barons of Asia and the Middle East appear to be in the game for deal-making know-how and long-term profits, the best way to play this newly emergent - but potentially powerful - market trend would be to follow along on some of the best investment deals these state-controlled investment funds make.
Let's consider three.

A Turnaround to Bank on

Of all the financial-sector forays the Cash Barons have made to date, the one we like best at Money Morning is beleaguered U.S. banking giant Citigroup Inc. (C).

Citigroup - and financial-sector stocks in general - underscore why it's shrewd investing strategy to follow the best sovereign-wealth fund plays. These state-run investment vehicles bought into the financial-services sector at a point one could argue was the absolute market nadir: Nobody wanted the shares, and analysts were actually rating them as "sells" in some cases.

But once the sovereign funds placed their bets, the private-equity crowd - a shrewd group themselves - subsequently followed suit.
"Financials are going to be a big sector play in 2008," Joseph Russell, a managing director at the Chicago-based hedge fund, Citadel Investment Group LLC, told The Wall Street Journal.
Many private equity firms have been laying the groundwork for months to make Russell's prediction a reality.  In June, Washington, D.C.-based Carlyle Group announced the formation of a Financial Intuitions Group. The group - headed by Edward J. "Ned" Kelly III, the former chairman, president and CEO of Baltimore-based Mercantile Bankshares Corp., and David K. Zwiener, former president and COO of The Hartford Financial Services Group, Inc. (HIG) - will seek out global investments in the financial services sectors, including banking and insurance.
Kelly, The Wall Street Journal reports, is on the lookout for troubled firms that could benefit from an equity boost. He's also watching for firms that are interested in divesting subsidiaries in order to raise some quick capital. Carlyle hasn't set a firm budget for financial sector investments and is willing to invest up to $5 billion in the right deal.

If you were a sovereign-wealth-fund shadow investor, you'd have likely already made your investment in a bank or brokerage when you spotted the Carlyle Group's announcement. If so, this is exactly what you'd want to see. Once you have your investment position, the more interest the stock attracts, the higher it will trade. And there's a predictable progression: Once the private-equity folks invest, the mutual funds and money managers will follow. Only then, with the share price nearly fully recovered, the retail investor will finally ante up, sending your shares even higher into profitable territory.

But it's important to follow the correct sovereign-wealth-fund investment. In terms of a financial-services play, we believe that investment is Citigroup.

At a recent price of $26.34, Citi's shares are down 58% from their 52-week high of $55.55.

In my 1998 book, "Contrarian Investing: How to Buy and Sell When Others Won't and Make Money Doing It," my co-author and I divined several key indicators that help investors identify which down-on-their luck corporations can actually be turned around. Citi already meets the key requirements we'd used to identify profitable stock plays.

  • Its stock is down by at least 50% from its 52-week high.
  • It has installed a new management team.
  • And, in lieu of having heavy buying by insiders, Citicorp has received massive investments from what my co-author and I referred to as "knowledgeable outside investors."

In Citi's case, those "knowledgeable outsiders" were almost all sovereign-wealth-fund buyers - once again buying in at bargain prices as U.S. investors were fleeing in terror. That's a mistake.

With the help of these knowledgeable outside investors, Citigroup raised $22 billion in new capital. And the lion's share came from Middle East Cash Barons, most of them state-controlled.

The first cash infusion came in November, when Citi received a $7.5 billion investment from Abu Dhabi Investment Authority (ADIA), the United Arab Emirate's state-controlled sovereign wealth fund. Under the terms of the November investment, ADIA's stake will not breach 4.9%, and it will have no managerial oversight.

And that was just the start.

In January, Citi announced that it had raised an additional $14.5 billion.

Saudi Prince Alwaleed bid Talal - a well-known Contrarian investor who already holds a 3.6% stake in Citi - boosted his stake in the bank to the 4.9% maximum permitted without triggering a U.S. regulatory review, Bloomberg News reported.

Alwaleed isn't a sovereign fund - he's a global juggernaut all by himself. For purposes of context, however, Alwaleed's investment is still important to note. You see, it was Alwaleed who bailed out Citigroup-predecessor Citicorp Inc., with a $590 million investment in 1991. That 1991 turnaround foray made Alwaleed Citi's largest individual shareholder for more than 15 years. Even recently, with Citi having shed half its value, Alwaleed's investment was still worth approximately $6 billion.

And at the same time Citi announced Prince Alwaleed's latest investment, the bank also disclosed that it would receive cash investments from sovereign wealth funds in Singapore and Kuwait, as well as an investment from former Chairman Sanford "Sandy" Weill.

The infusion includes nearly $7 billion from Singapore Investment Corp Pte., and $3 billion from the Kuwait Investment Authority.

This turnaround looks uncannily like the one that Prince Alwaleed helped Citicorp engineer back in the 1990s. That was a tremendously profitable venture for investors who took the plunge: investors who'd bet on Citicorp back then had snapped up shares that traded as low as $8.63 in 1991, and then rode them until the stock peaked at $140 a share in 1997, when my co-author and I were putting the finishing touches on our manuscript [These prices have not been adjusted to correlate with the subsequent merger with Travelers Group, or with today's Citi share prices].  [For a Money Morning investment research report that that chronicles the parallels between the two turnaround opportunities, please click here. The report is free of charge].

To understand the high probability of a profitable turnaround, Fitz-Gerald says investors need to keep several factors in mind:

  • First, the core of Citigroup's current problems were caused by a breakdown in risk management - and not a deterioration of the ongoing operations that will provide the profits and cash flow needed for the turnaround.
  • Second, the company is globally diversified, and many portions of its business are enjoying very strong growth rates - especially those involved with China and Eastern Europe.
  • The company is trading for a pittance: At current levels, the implied normalized earnings power of the company reflects a future stock price that could be as high as $60 a share.
  • And even after the dividend cut, the stock has a dividend yield of nearly 5%.

 "Once again, at a time when most investors were running for the exits, some of the world's savviest investors lined up to buy Citigroup shares," Fitz-Gerald wrote in a recent investment research report.

Deal Yourself In

Of all the sovereign-wealth-fund deals on the books right now, one of the best opportunities for profit is MGM Mirage (MGM), the Las Vegas-based casino-resort operator. But don't let that description limit your thinking: Thanks to a financing deal from the state-run Dubai World, MGM is actually a high-profit play on China.

Let's review that deal. Dubai World is essentially a holding company/investment vehicle for the state of Dubai. Last summer, when MGM shares were trading in the $80 range, Dubai World said it would invest $5 billion in MGM.

The goal: Help MGM execute its China strategy, which the Vegas gaming firm has been pursuing since the middle 1990s.

This China strategy has several facets. First, MGM has already invested an estimated $1 billion in Macau - like Hong Kong, a so-called "Special Administrative Region," or SAR. Casino companies like MGM or the Las Vegas Sands Corp. (LVS) are dropping billions in Macau, a resort area situated just off China's southern coast, because gambling is legal there [it's banned on the mainland].

Indeed, for the nouveau riche of Asia, Macau's white-hot "Cotai Strip" could easily one day eclipse its Vegas counterpart as the place global gamblers want to frequent.

But as a way of hedging its bets, MGM is also set to develop several billion dollars of additional real estate projects around the world through a joint venture with the Diaoyutai State Guesthouse of Beijing. The long list of projects begins with a series of non-casino hotels in second-tier China cities, where incomes are growing and such luxuries as "vacations" are becoming more the norm - but where Western marketing and branding are still in their infancy. That will allow MGM to roll out one of its typically sophisticated marketing campaigns [customized for China's culture and targeting its emerging middle class].

"At the most basic level, Dubai is hoping to grab a share of the ever-increasing power of the Chinese consumer at a time when China's consumers have not yet formed opinions about branding or luxury travel experiences,' said Fitz-Gerald, Money Morning's investment director. "Given that Asian consumers in general - and Chinese consumers in particular - tend to be much more highly brand savvy than their European and American counterparts, this is an especially important strategy to execute at the present time."

What's more, China isn't MGM's only target market overseas. It's working with the Mubadala Development Co. in both Dubai and Abu Dhabi on some similar luxury-level [non-gaming] projects. Mubadala is an investment arm of the Abu Dhabi government.

MGM is on the verge of becoming a top global brand in the hospitality sector, and Dubai wants a piece of the action. Last summer, Dubai World launched a tender offer, hoping to acquire 9.5% of MGM's shares. But it ended the initiative after MGM shares soared to new highs of more than $100 each, vowing to resume the effort if the stock price dropped.

In January, with the shares trading in the $66 range, Dubai World not only re-launched its tender offer, it boosted the number of shares it hoped to buy by 50% to 15 million. Only months after they'd sent the shares to record highs, U.S. investors had been abandoning MGM's stock, worried that a downturn in consumer spending would torpedo the share price. But Dubai World knew a deal when it saw one.

"We're a beneficiary to the degree that America's on sale," MGM Chief Executive Officer James J. Murren told The Associated Press. "There is a significant, very-material influx of visitors coming to the United States, either from Canada, where the dollar's at parity, or from Asia, or from Europe, and they're finding great value here in America and certainly in Las Vegas. We clearly think the company's undervalued."

So does Dubai.

That's just how U.S. investors have to view this opportunity, says Fitz-Gerald.

"Dubai is getting in on the ground floor of some very powerful trends," he said in a recent interview. "It's a classic Asian business strategy and one that reflects a very sophisticated understanding of how Asian consumers think and act when it comes to their money."

Let Your Profits Take Flight

Our third and last pick will be an indirect beneficiary of the emergence of the sovereign funds. It's the airliner-maker and defense-industry giant, The Boeing Co. (BA).

As the Cash Barons transform deal-making into more of a global game, it's only natural that worldwide travel will escalate. And with the work the funds are doing with such firms as MGM to promote tourism in Mainland China, Macau, Hong Kong and other destinations, worldwide tourism is certain to grow at a faster clip, as well.

What's more, the Middle East Cash Barons are financing substantial new "destination-oriented" development in their home markets - especially Dubai, which is building glitzy hotels and has even constructed private islands in the interest of making itself into a venue that the newly affluent will want to sample and enjoy.

China alone will require 3,400 new airplanes worth about $340 billion over the next 20 years, Boeing projected in its recently updated annual forecast for the commercial airplane market. And that doesn't even factor in other white-hot Asian markets - such as Vietnam - or these new travel destinations in the Middle East, all of which will also need to outfit their air fleets as their economies make the leap from "emerging" to mainstream.

During that same 20-year stretch addressed by Boeing's market forecast, China would have the fastest-growing airliner market in the world, making it the biggest market outside the United States for new commercial airliners. In fact, if you average it out, from China alone you're talking about sales of $17 billion a year.

Indeed, over the next 20 years, Boeing is forecasting that air carriers worldwide will need to acquire 28,600 commercial aircraft with a value of $2.8 trillion. The Boeing forecast is generally viewed as the world's best analysis of the global market for commercial airliners and cargo aircraft.

The huge revenue potential of the global airliner market - combined with the low number of viable competitors and the high barriers faced by new potential entrants - is a big reason that Money Morning's investment gurus all view Boeing as a promising global investment for years to come.

And there's a bonus: Boeing is a major defense contractor, the kind of company that does well during the periods of global uncertainty like the one we face today.

The stock is down about 20% from its 52-week high. With a current Price/Earnings ratio of about 16 and a forward P/E of roughly 17.5, the stock isn't pricey. Plus, it carries a dividend yield of nearly 2% - another plus at a time when stocks featuring income streams are worth the extra effort to ferret out.

The Emergence of the "Cash Barons"

In the past six months alone, Middle East and Asia sovereign wealth funds have doled out billions for stakes in major international companies. But the trend has been emerging for the past several years. Just take a look:

Date

SWF

Deal

2008

Feb. 11

Abu Dhabi

UBS AG (UBS), Europe's largest bank, and Abu Dhabi Investment Co. (ADIC), the United Arab Emirate's state-controlled sovereign wealth fund, say they will start a $500 million joint venture that will invest in infrastructure projects. The fund, which will be launched in the first half of this year, will focus on utility, transportation, energy and society-improvement projects in both the Middle East and North Africa.

Jan.

Kuwait

The $250 billion Kuwait Investment Authority says it is seeking out investment opportunities with capital-starved European banks whose finances have been mauled by mortgage losses, Bloomberg reported. Though Kuwait's SWF has already invested in U.S. banks with a $3 billion investment in Citigroup and a $2 billion investment in Merrill Lynch & Co. (MER), it has set its sights on Europe, though noting that "we are interested if we are invited," a top officials said.

Jan. 15

Dubai

With MGM (MGM) shares now trading down in the $66 range - only months after the stock had posted record highs above the century mark - Dubai World not only re-launched its tender offer, it boosted the number of shares it hoped to buy by 50% to 15 million.

Jan.

China

More than 100 money managers worldwide apply for the chance to invest part of the $200 million controlled by the China Investment Corp., China's sovereign wealth fund, Bloomberg News reported. The firms had been invited to apply the month before. They will manage CIC assets via stocks on the MSCI All Country Index, MSCI EAFE Index, MSCI Emerging Markets Index and in non-Japanese Asian stocks.

2007

Dec. 27

Saudi Arabia

Saudi Arabia says it's establishing a sovereign-wealth fund that will eclipse Abu Dhabi's $900 billion venture to become the largest in the world. As the new "King of the Cash Barons" coterie, the state-controlled Saudi investment pool will be positioned as a major rival to other government-run venture funds currently controlled by cash-rich nations in Asia and the Middle East.

Dec. 24

Singapore

Merrill Lynch & Co. Inc. (MER), the largest U.S brokerage firm, says it will receive a needed cash infusion of $6.2 billion - with roughly $5 billion coming from Singapore's state-run controlled Temasek Holdings Pte. Ltd. The rest will come from Davis Selected Advisors LP. At the time, Merrill's shares were down 40% year to date. Just weeks before, after Merrill announced an $8 billion write-down and facing the prospect of its worst loss in its 93-year history, CEO E. Stanley "Stan" O'Neal, former chief executive, retired at the board's urging.

Dec. 20

Dubai

Dubai World subsidiary Limitless Holdings Pte. agreed to form a joint venture with UEM World Bhd. (PINK: UEMWF) to build $448 million worth of luxury homes in Malaysia's Johor province - which is to Singapore what New Jersey is to New York City. The housing project will create a new city called Nusajaya on the southwest tip of Johor at Puteri Harbour, a 688-acre waterfront precinct fashioned after the French Riviera.

Dec. 10

Singapore

Faced with a $10 billion write-down and the possibility of its first annual loss in a decade, Swiss banking behemoth UBS AG (UBS) says it received an $11.5 billion investment from state-run venture funds in Singapore and the Middle East. UBS had already announced a $3.8 billion write-down. The deal gives the state-run Government of Singapore Investment Corp. Pte. Ltd. (GIC) a 9% stake in UBS.

Dec.

Singapore

Renowned Chinese dealmaker Fang Fenglei joins forces with Singapore's government-controlled Temasek Holdings Pte. Ltd. to launch a new $2 billion China-focused private-equity fund.

Nov. 27

Abu Dhabi

Abu Dhabi pours $7.5 billion into ailing Citigroup Inc. (C), which recently lost its status as largest bank by market capitalization to Bank of America Corp. (BAC).

Nov. 26

 

Dubai International Capital, a state-owned holding company, acquired an undisclosed stake in Japan's electronics and media juggernaut Sony Corp. (SNE).

Nov. 16

Abu Dhabi

Abu Dhabi invested $622 million (an 8.1% stake) in California-based microchip-maker Advanced Micro Devices Inc. (AMD).

Nov. 12

Abu Dhabi

MGM Mirage (MGM) will partner with the Mubadala Development Co. to develop the $3 billion MGM Grand Abu Dhabi resort. The project will be owned by Mubadala, which is wholly owned by the government of Abu Dhabi, although MGM will earn management fees. The property, aimed at the high-end market, will have "unparalleled views of the city skyline" and "stunning panoramic views of the waterfront," the companies said in a joint statement.

Oct. 20

Dubai

Dubai International Capital agreed to invest $1.26 billion in the initial public offering of hedge fund Och-Ziff Capital Management Group LLC (OZM).

Aug. 22

Dubai

Dubai World, another investment arm of the state, offers to plunk down $5.1 billion for a 9.5% stake in MGM Mirage (MGM).

Aug. 14

Dubai

Istithmar, part of Dubai World, was cleared to buy Barneys New York Inc. for $942.3 million from Jones Apparel Group Inc. (JNY).

May 21

Saudi Arabia

General Electric (GE) sold its plastics division to Saudi Basic Industries Corp. - the country's largest public company, though 70% owned by the government - for $11.6 billion.

May

China

China Investment Corp. purchases 10% stake in Blackstone Group LP (BX). China's sovereign wealth fund, the China Investment Corp. (CIC), breaks away from its traditional investment strategies [U.S. Treasury bonds] for the first time and invests $3 billion for 10% stake in The Blackstone Group L.P. (BX).

May

Dubai

DIFC Investments, a subsidiary of Dubai International Financial Centre, invested $2 billion in Deutsche Bank AG (DB), Germany's largest public bank.

2006

July

Singapore

Temasek Holdings, Singapore's state-owned investment company, pays $4 billion for a 12% stake in Standard Chartered Bank. Other Middle East investors subsequently follow suit.

2005

 

China

China's government-owned CNOOC was blocked in an attempt to buy U.S.-based oil company Unocal on the basis of national security concerns.

Source: Money Morning Research.

Editor's Note: Money Morning's "Outlook 2008" series last covered soaring coal prices.

News and Related Story Links:

  • Examiner.com:
    MGM Mirage, Dubai World Boost Offer.
William Patalon IIIWilliam Patalon III

About the Author

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Before he moved into the investment-research business in 2005, William (Bill) Patalon III spent 22 years as an award-winning financial reporter, columnist, and editor. Today he is the Executive Editor and Senior Research Analyst for Money Morning at Money Map Press.

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