Sunday, April 19, 2020

Cash-rich Gulf funds hunt for bargains as asset prices plunge

Cash-rich Gulf funds hunt for bargains as asset prices plunge

Saudi Arabia’s PIF has snapped up stakes in a cruise operator, oil groups and a football club

Andrew England in London and Simeon Kerr in Dubai 

Gulf sovereign wealth funds including Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala are mobilising to buy assets whose valuations have been hit hard by the coronavirus pandemic.

Bankers and people close to the funds said they were looking to invest in areas that would bounce back in a global recovery, such as healthcare, technology and logistics.

A senior Saudi official told the Financial Times that the kingdom had set up a dedicated team to look at the “midterm and long-term, downside and upside” of the global crisis, while the $320bn PIF, chaired by Crown Prince Mohammed bin Salman, pursued a strategy that was a “mix of strategic and opportunistic”.

The Saudi fund has already made a series of big investments in the past few weeks, from cruise operator Carnival to oil groups Royal Dutch Shell, Total, Repsol, Equinor and Eni. This week it led a group that agreed to acquire English football club Newcastle United in a £300m deal.

The Saudi official said Riyadh was examining how to “utilise” the situation to “reduce the impact [on the kingdom] long-term, but also benefit from the potential behaviour and business model changes around the world”.

“We are identifying very interesting areas, whether it’s in logistics, whether it’s in technology and telemedicine, or others that are very promising,” the official said.

They want high visibility but they also want to make money. 

They want to diversify the economy, but want to be opportunistic

Mubadala, Abu Dhabi’s most active sovereign investment vehicle, which is headed by Khaldoon al-Mubarak, one of the emirate’s most influential policymakers, is also actively seeking investments, including in sectors such as healthcare technology in the US and Europe, and in China.

One person familiar with the $230bn fund said it was “being a careful steward of its portfolio, while waiting for the right time to begin more large-scale capital deployment”, highlighting potential investments in “cutting-edge pharma and med-tech”.

Both Mubadala and Saudi Arabia’s PIF were key investors in SoftBank’s struggling Vision Fund, pumping in $15bn and $45bn respectively. 

The $320bn Qatar Investment Authority, whose trophy assets include London’s Shard building and Harrods department store, was already seeking to increase its exposure to North America and Asia and last year set up a dedicated emerging markets team to take direct stakes in companies in Latin America, Africa and Asia.

“Given the volatility in the markets, the QIA is looking for investment opportunities,” a Qatari official said.