Qatar Investment Authority taking steps to restructure assets

Doha
Doha

In an attempt to manage a significant amount of capital, the Qatar Investment Authority (QIA) is apparently shuffling up to $100 billion into new investment efforts in what Arabian Business magazine is calling a “major overhaul.”

A magazine story in mid-May said the Qatari sovereign wealth fund (SWF) is creating a new internal division called Qatar Investments, to be headed by Ahmed Al Rumaihi, formerly a diplomat in the United States. Changes also include new hires from Citigroup and other sources.

The QIA fund has more than $250 billion in assets. Early this year, reports emerged that the QIA is opening an office in New York as part of an effort to invest $35 million in the United States in the next five years.

With all of this change in leadership and investing, those with a focus on how sovereign wealth funds work are asking big questions, such as whether the overhaul has anything to do with the low prices and how less-than-stellar report cards from places such as the international Forum of Sovereign Wealth Funds affects this type of international investment and the work of the QIA in particular.

David Roberts is part of the Defence Studies Department at King’s College, London. Before his position at King’s College, Roberts was director of the Qatar office of the Royal United Services Institute for Defence and Security Studies (RUSI Qatar).

Roberts said he has seen incremental change in the workings of the Qatar Investment Authority since 2014, when a new management group took over.

“There's been a gradual shift for a number of years.” Roberts told the Gulf News Journal, characterizing the previous management approach of the fund under Hamad bin Jassim bin Jaber bin Mohammed bin Thani Al Thani, which seemed to mix foreign policy with investment to a degree.

“It was, on occasion, little more than a one-man band.” Roberts said.

Now, Roberts said, the fund is restructuring to fit a philosophy of modernization and professionalism.

"We are seeing the slow but sure normalization and professionalization of the fund.” Roberts said, citing the hiring of outside experts that helps Qatari leadership to operate the fund in a way that is seen as standard and practical by global financial experts.

Roberts said the investment changes are partially a move to change what he called “overexposure” to U.K.-Europe in the past.

“We've seen a gentle diversification.” Roberts said, citing Qatari investment in downtown Washington D.C. “If we are seeing movements in the QIA, they are more economically rational than they had been in the past.”

As for reports panning the QIA for noncompliance with the Santiago Principles governing SWFs, as well as lack of transparency, Roberts stressed that it's important to realize the challenges that face Qatari leaders.

“Qatar is a young state.” Roberts said. “It's so unusual…(fund management) hasn’t had many years of proper stand-on-your-own-feet experience.”

Still, Roberts said, those studying the entire picture shouldn’t gloss over existing problems with potential corruption.

“I don't mean to excuse the problems.” Roberts said. “There are sensitive questions.”

For example, Roberts said, since the sovereign wealth fund ultimately belongs to the people, there is a push to have transparency about how well fund investments are doing. However, it's not in the direct interests of the government to really accommodate that.

“They're not inherently disposed to transparency.” Roberts said.

Ultimately, Roberts said, it's likely that big moves in the fund activity, and the condemnation of outside critics, are all part of a relatively inexperienced government that's working to make change in a quick fashion - change that could go on for years as the region struggles with low oil prices and other challenges, and new technology influences the ways that people, and nations, interact.

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Qatar Investment Authority Diplomatic St Doha, Doha

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