Qatar Fund Plans U.S. Deals to Diversify Amid Gulf Crisis (1)

Sep 13, 2017 10:18 am ET

(Bloomberg) -- Qatar plans more U.S. investments as it seeks to diversify its assets further as a diplomatic standoff with its Gulf neighbors continues.

The Qatar Investment Authority, which was created to handle the windfall from the world’s largest liquefied natural gas export base, will spend most of what remains of its $45 billion investment target on infrastructure in the U.S., Chief Executive Officer Sheikh Abdullah Bin Mohammed Bin Saud Al Thani said in Doha Wednesday. The fund, which is also looking for technology and healthcare assets, has invested more than half of the money so far, he said.

“For a long-term investor like us having to liquidate some of your assets with asset prices at the bottom is the worst-case scenario,” he said. “How can you develop a global portfolio strategy when you are faced with uncertainty? The answer is diversification. Diversify your investment by region, diversify by investing in all sectors.”

The QIA is pressing ahead with plans to invest in the U.S. to show that the political crisis with Saudi Arabia and its allies hasn’t impacted its ability to strike global deals, people with knowledge of the matter said in July. The fund, which has amassed a $320 billion portfolio around the globe, has deployed the nation’s riches on assets ranging from British bank Barclays Plc to Total SA and commodities trader Glencore Plc, with the bulk so far confined to Europe. The QIA now ranks as the ninth largest in the world, according to the Sovereign Wealth Fund Institute.

Severed Ties

Saudi Arabia, the United Arab Emirates, Bahrain and Egypt severed diplomatic and transport links with Qatar on June 5, accusing the sheikhdom of supporting Sunni extremist groups and Iranian-backed militants. Qatar has repeatedly denied the charges.

The dispute pits U.S. allies against each other in a struggle over political dominance in a region that controls about a fifth of global oil supplies. The small peninsular nation also hosts the regional headquarters for U.S. Central Command, which includes a state-of-the-art air base the Pentagon depends on to target Islamic State.

Rosneft Stake

The QIA and commodity trader Glencore last week agreed to sell most of the stakes they purchased in Rosneft PJSC in December. Closely-held CEFC China Energy Co. will pay about $9 billion for the stake, leaving the Qatar fund with a 4.7 percent holding.

“This is part of a plan,” Al Thani said. “This is how we structured it. ”

Glencore and Qatar teamed up to buy an $11 billion, 19.5 percent joint stake in Russia’s largest oil producer from the state. The deal was one of the biggest investments in the global-energy industry last year.

(Updates with CEO comment on Rosneft deal in seventh paragraph.)

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