Mideast Gulf: Ipic and QIA unite to form mega-fund
TWO of the Middle East's biggest state-owned investment vehicles are joining forces to invest in a new fund that will bid for global acquisitions, including energy assets. Abu Dhabi's International Petroleum Investment (Ipic) and Qatar Investment Authority (QIA) will invest $2bn in a new fund for global acquisitions, Ipic managing director Khadem al-Qubaisi said on 25 March.
Ipic is an investment vehicle for the emirate of Abu Dhabi, which controls more than 90% of the UAE's oil reserves. It has made several upstream investments overseas in recent years and has a portfolio valued at $12.4bn. Ipic also signed an agreement in March with the US' Occidental Petroleum to acquire joint interests in hydrocarbons-related projects in the Middle East and beyond.
The uniting of the $80bn QIA with Ipic will create a large new entrant into the oil and gas asset market. Ipic and QIA will initially invest $1bn each in the new fund, which is to become operational in six months' time. The deal may herald a shift in Gulf investment strategies. Until now, the large sovereign wealth funds have tended to invest in commodities, partly to hedge against the weakening dollar. Many have also acquired large stakes in US banks.
According to investment bank Merrill Lynch, sovereign wealth funds are expected to grow by $1.2 trillion a year for the next five years, in terms of the value of assets held.n