Mid-East nations in race to snatch world’s prized assets
FLUSH with cash from burgeoning oil revenues and a regional economic boom, Middle Eastern governments are buying overseas assets at record rates.
This week alone, several Middle East governments made big buys around the globe. Abu Dhabi paid US$1.35 billion ($2.03 billion) for 7.5 per cent of Washington-based Carlyle Group — the world’s second-biggest private equity firm.
Meanwhile, Qatar bought 20 per cent of London Stock Exchange Group in a deal worth about US$1.2 billion late Thursday, the same day neighbouring Dubai agreed to acquire a stake in the United Kingdom bourse from Nasdaq stock market.
Qatar also won approval to examine the financial records of J Sainsbury, the second-largest UK supermarket chain.
All told, the deals are worth US$25 billion, according to Bloomberg data.
The pace of international investments by Gulf states, which earn US$1.2 billion a day from oil exports, is quickening as they seek to diversify beyond energy.
The nations have already spent a record US$68 billion on overseas acquisitions this year, showed the Bloomberg data, compared with US$30.8 billion in all of last year.
Acquisitions in the United States and Britain account for slightly more than half of the total this year.
Said Dubai’s Gulf Research Centre’s chief economist Eckart Woertz: “They are not just putting their money in bank deposits and government bonds any more … They are after strategic assets.”
There is an emerging group of Arab states whose leaders are generally friendlier to the West and are eager to make a mark in global finance, noted the Wall Street Journal in its report on Friday.
“The deep pools of capital in the Middle East are increasingly affecting all aspects of global financial markets, both private and public,” financial consultant Monte Brem, who advises Middle Eastern institutions on their international investments, told the Journal.
Middle East investors are also keen on undervalued brand-name businesses, observers said. “Many assume that cash-rich Middle Eastern investors will spend money easily, but this is not the case as they are very savvy in making financial and investment decisions,” said Mr Mohd Hasnul Mohd Ismail, who manages a Malaysianbased asset investment firm.
Observers also note that the Middle East appears to have become more sophisticated in managing backlash from highprofile deals, following last year’s painful lesson in which a Dubai-controlled company sold the US port operations of a British company it had acquired.
The deal fell through after US politicians argued that selling the port was a security risk, post Sept 11 attacks.
This time round, Dubai is taking all measures to ensure that there will be no backlash from its interest in seeking a minority stake in Nasdaq.
It has asked the Bush administration to vet the deal upfront for potential national-
security issues and hired a team of Washington lobbyists and strategists to reach out to US officials a day before the proposed deal became public.
Meanwhile, the race to shop for prize deals for stock exchanges worldwide is shaping up to be a competition between Dubai and Qatar, who are both vying to be the Gulf’s financial hub.
Just 10 years ago, when Dubai was not much more than a port with a single business thoroughfare in the desert, such ambitions would have been dismissed as laughable.
This is the same for Qatar. — AGENCIES
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