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US losses are not deterring sovereign wealth funds from investing abroad, but don’t expect us to bail out collapsing firms, says Kuwait investment chief.
September 23, 2008 3:36 by kippreport
The Kuwait Investment Authority (KIA) has lost a bundle – around $270m – from its investment in US bank Citigroup. But despite getting its fingers burned there, it is still looking for investments abroad, its managing director, Bader Al-Saad, says on Al Arabiya TV station.
Overall, the sovereign wealth fund is not doing so bad, the investment chief says. The fund has not lost any money on its investment in Merrill Lynch, for instance, and has in fact made a profit of around $600m on its investment in Visa.
Saad defended the fund’s decisions on television at a time when KIA is facing criticism from parliamentary deputies – criticism that is rare in a region where elected parliaments are a rarity – for spending $5bn in January this year on investments in Merrill Lynch and Citigroup.
These shares have since fallen as the US banking crisis has spun out of control. But Saad says the KIA was still eyeing investment opportunities abroad.
“Disasters in the US, some European countries or Asian countries create investment opportunities in the real estate sector, the financial industry or other sectors,” he says.
It’s obvious that the regional wealth funds are looking for those desperate to sell. But don’t expect them to be knights on white horses that rescue collapsing firms like Lehman Brothers.
“We are not responsible for saving foreign banks.” Saad tells Al Arabiya.
The buying spree continues, meanwhile: On Tuesday, Abu Dhabi-owned investment group, Mubadala, bought 50 percent of Kor, a California boutique hotel company.
The recent much-hyped takeover of Manchester City football Club by another Abu Dhabi investment group led English football club Newcastle to come calling.
But like Lehman Brothers, Newcastle failed to woo Gulf investors. It seems they are not responsible for saving foreign football clubs, either.