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.
