Dubai with cash
Investors searching for financial logic to Qatar’s raft of high profile foreign investments risk coming unstuck. Within recent weeks the tiny Gulf state’s sovereign fund has made moves on France’s Total, conglomerate Lagardere and luxury house LVMH. The Qataris’ rapidly expanding pick n’ mix portfolio has led bankers to compare the strategy to the one that led Dubai into crisis.
Unlike the debt-laden emirate, Qatar is investing at the bottom of the cycle and its cash is in search of a home. Hydrocarbons are forecast to generate revenue just shy of $100 billion in the 2012, according to a Reuters poll. The current account surplus is expected to hit 29 percent of GDP, or $54 billion. It’s not clear how much goes to the sovereign fund. But in a country with one of the highest GDP per capita in the world, the picture is one of plenty.
Qatar’s headline-grabbing punts are concentrated in western Europe. That, bankers say, reflects the top-down decision-making process of a still young sovereign fund where a small circle of individuals are focusing on a region they know well and in which they are welcome. Europe is the number one destination, both financial and touristic, for rich Arabs seeking to escape the hot sweltering summer months.
Aside from geography, the assets bear little in common. Some investments look opportunistic, like the bet in Barclays, others strategic like the recent move on European Goldfields. But it is hard to say what owning Harrods, live French domestic football rights, or shareholdings in floundering Greek banks bring to the state of Qatar beyond a sense of prestige and influence.
Tiny Qatar appears to want many conflicting things. To be seen as a reliable investor and energy partner, to be profitable as well as an influential regional power – alongside Saudi Arabia, Turkey and Egypt. Stakes in Europe’s big names – especially those that come with board seats – give Qatar direct access to key movers and policymakers. That might generate financial returns along the way but calling it a focused investment strategy would be overkill.