Interpreting Middle East Economic News and Analyzing Market Trends

Kuwait wealth fund assets top $291 billion, focuses on PE not bonds, while Kuwait Petroleum joins $9 billion oil refinery venture in Vietnam

  Kuwait’s largest sovereign wealth fund, Future Generations Fund, managed by the Kuwait Investment Authority (KIA) had assets of $261 billion at the end of March last year, according to Reuters.  The report also said that 47% of the fund was invested in stocks.  In its search for returns the KIA has also been moving more aggressively into private equity.

“The Kuwait Investment Authority (KIA) is focused on private equity funds instead of bonds, Badr Al Saad, the head of Kuwait’s sovereign wealth fund, said yesterday.

Mr Al Saad said that the KIA has been investing in private equity funds where the returns are good and is shunning bonds because interest rates are so low.

“We have been investing in private equity funds lately … the returns are good,” he said in rare public comments about the KIA’s investment strategy. He named Texas Pacific Group and CBC as two of the funds the KIA has been investing in.

He said the fund wanted to invest in upcoming infrastructure projects in Europe and the United States.

“We think that these countries need to develop their infrastructure. We think that investments in infrastructure will be big in the next five years,” he said.  Read the full article from The National.

The KIA, which is the oldest sovereign fund in the world according to its website, has never enjoyed the spotlight as much as the younger wealth funds in the region.  In contrast to the Qatar Investment Authority (QIA), which has been buying up trophy asset around the world, the KIA prefers to take a long-term view of markets and go shopping for media mileage.  I guess this is one reason why it still remains one of the largest such funds in the world.

In related news, Kuwait Petroleum International is in a $9 billion oil refinery venture in Vietnam.  Kuwait has been actively exploring in Vietnam as part of its long-term plan of building up oil reserves, refining capacity and distribution networks in Asia.  It has been actively refining and distributing its petroleum products in Europe for decades.  Here’s more on the Vietnam venture:

“Vietnam on Sunday inked a deal with firms from Japan and Kuwait to build an oil refinery complex worth nearly US$9 billion as part of efforts to meet its growing energy needs.

The Nghi Son refinery, which is due to start operating by 2017 in Thanh Hoa province, about 200 kilometers (125 miles) south of Hanoi, will turn Kuwaiti oil into petrol and other petroleum products.

It will be able to process 10 million tons of crude oil a year, the government said.

State-owned PetroVietnam will own a 25.1-percent stake in the joint venture while Japan’s Idemitsu Kosan and Kuwait Petroleum International will each hold 35.1 percent. Mitsui Chemicals of Japan will own the remaining 4.7 percent.” 

Read the full article from Thanh Nien News.