Sovereign Wealth Funds

Russia’s oil-and-virus airbag is robust but finite

24 Apr 2020

The double whammy of a crude price collapse and Covid-19 could cause a hefty budget deficit. Moscow’s $170 bln wealth fund can plug a hole worth 5% of GDP if need be. The issue is more the optics of raiding the piggy bank while looking relatively stingy on subsidising wages.

Saudis’ Warren Buffett impression looks skin-deep

9 Apr 2020

The kingdom’s wealth fund looks to be ditching diversification by snapping up stakes in big European oil groups. Unless MbS knows something that others don’t, buying stock on the open market is riskier than a classic Sage of Omaha swoop. Oil groups may also be cheap for a reason.

Pre-virus era rule book will lead investors astray

31 Mar 2020

The market rout means Norway’s wealth fund and other money managers are less exposed to stocks than their ideal purely because shares fell so much relative to bonds. Rectifying the imbalance would unleash equity buying of $500 bln or more. But a return to old norms will be risky.

Corona Capital: Cirque du Soleil, Airlines, France

27 Mar 2020

Concise views on the pandemic’s corporate and financial fallout: Cirque du Soleil may leave TPG sunburnt. Airlines get a sweet bailout. And France joins the campaign against dividends.

Gulf’s sovereign funds are now gilt-edged airbags

19 Mar 2020

With oil now below $30 a barrel and emerging market outflows exceeding those seen in 2008, the region’s dollar pegs will be tested. Saudi Arabia and others may cut budgets in response. At the very least that implies ADIA, QIA and Mubadala’s dealmaking wings could be clipped.

Russia rainy day fund raid sets bad precedent

6 Mar 2020

The country’s National Wealth Fund may buy the central bank’s 50% stake in Sberbank for $36 billion. It’s a sneaky way for the government to boost spending without breaking its fiscal rules. The danger is that President Vladimir Putin repeats the ruse with other state firms.

Goldman faces drip-drip 1MDB pain like Jho Low

31 Oct 2019

The alleged mastermind of the Malaysian fund fraud will pay the U.S. $700 mln. The deal’s loose ends hint at future pain for others, including the Wall Street bank. CEO David Solomon wants to draw a clean line under the scandal. Instead Goldman could end up paying multiple times.

EU’s 100 bln euro tech fund scratches wrong itch

23 Aug 2019

Brussels officials, sad about not having their own Google, are cooking up an investment vehicle to fund home-grown unicorns. The bloc’s history suggests the main result will be a lot of squabbling. More important, lack of money isn’t what holds back European tech startups.

Abu Dhabi’s private equity plunge is sensible idea

15 Jul 2019

Hiking direct investments to the asset class by the emirate’s $700 bln sovereign wealth fund - and cutting reliance on fee-hungry buyout firms - raises risks when the economic cycle turns. But ADIA’s status as one of the more measured SWF dealmakers affords a degree of comfort.

Branson’s space deal defies financial gravity

9 Jul 2019

The bearded billionaire is selling half his cosmic travel group to former Facebook executive Chamath Palihapitiya’s blank-check vehicle. A $1.5 bln valuation looks rich given Virgin Galactic’s record of two test flights. Still, it needs cash, and Palihapitiya has too much of it.

Gulf backers can recycle Vision Fund cash

8 Jul 2019

Saudi and Abu Dhabi investors are mulling whether to support SoftBank’s plans for a second $100 bln vehicle. Though cash is tight, they could pledge to reinvest returns from the first fund. The hitch is that CEO Masayoshi Son may not get the money as fast as he wants to spend it.

Qatar shows up late to wealth fund buyout party

18 Jun 2019

The gas-rich emirate’s wealth fund plans to choose its own investments in areas like tech and private equity, instead of using third-party managers. That chimes with what rivals are doing, and echoes its own racy history. Now is hardly the best time to revert to type, though.

Carlyle shows Mubadala benefits of procrastination

8 Apr 2019

The buyout group is acquiring 30-40 pct of Cepsa from the Abu Dhabi fund. The $12 billion enterprise value is in line with the Spanish energy group’s aborted IPO last October. The only downside is that a listing would have made it easier for Mubadala to sell more in future.

Saudi Aramco is big, just not big enough

2 Apr 2019

The oil producer’s accounts show it is hyper-efficient. That helps its valuation, as does the rise in the price of crude since Aramco first flirted with an IPO. But while the company is a giant, it still doesn’t warrant the $2 trillion value envisaged by Saudi’s crown prince.

Norway’s mega-fund fluffs move away from crude

8 Mar 2019

Oslo’s $1 trillion wealth fund will ditch oil exploration stocks, but stay invested in groups that also do refining. As a big producer Norway needs to tread carefully. But accepting the risk of subpar returns could have been a way to show greater climate change leadership.

Norway’s giant oil fund flaunts Achilles’ heel

27 Feb 2019

The Nordic state’s $1 trillion wealth vehicle lost money in 2018. A political mandate that obliges it to hold more equities rather than diversifying its exposure explains why. Even if these shackles were removed, the fund’s size complicates efforts to rev up performance.

Saudi stock market’s “MbS discount” to get worse

22 Nov 2018

Since Jamal Khashoggi’s murder in October, foreigners have dumped Riyadh-listed assets. Donald Trump’s indifference to the crown prince’s alleged role in the killing offers some reprieve. But the kingdom’s stability and long-term economic progress have been permanently impaired.

The Exchange: 1MDB, Goldman, Jho Low and Leo

19 Nov 2018

The new book “Billion Dollar Whale” chronicles the Malaysian mega-scandal involving Goldman Sachs and Leonardo DiCaprio. Co-author Tom Wright joined Breakingviews in Hong Kong to discuss how alleged mastermind Jho Low pulled it off and what the saga’s next chapter may bring.

Qatar’s flashy London deal hints at new direction

7 Nov 2018

The Gulf state’s wealth fund is buying posh London hotel Grosvenor House. Despite its neighbours’ blockade, Qatar has surplus cash to invest in trophy assets that offer good returns. Acquiring glitzy baubles suggests Qatar’s new fund managers will prioritise the former.

Goldman gets no closure from banker’s 1MDB plea

1 Nov 2018

Former star banker Tim Leissner pleaded guilty in the Malaysian money-laundering scheme. The firm can cite his lies and deception. But fat fees from bond offerings should’ve raised red flags. U.S. authorities have punished Wall Street for past examples of poor oversight.