Qatar’s top dealmakers get ready for a spending power boost

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Qatar is targeting more investment in new frontiers and sectors like technology and health care, as high demand for its natural resources and the end of a $300bn  World Cup splurge bring the promise of extra cash to burn.

That has the roughly $450bn Qatar Investment Authority looking beyond its traditional hunting grounds in Europe and penchant for trophy assets as it searches for new places to write its next big checks, the sovereign wealth fund’s top dealmakers said in an interview with Bloomberg News.

“There is a clear mandate to prepare the institution to handle more inflows in the coming years,” said QIA Chief Executive Officer Mansoor Ebrahim Al-Mahmoud, who rarely speaks to the media. That means increased spending in Asia and the US, where QIA plans to invest across climate change, infrastructure and digitization.

“We will continue to deploy in the continent, but a larger share of our investments will be going to the other two regions, given the opportunities we see in the US and in places like China and India,” said Al-Mahmoud.

Founded in 2005 to handle Qatar’s revenue from liquefied natural gas, of which it is one of the biggest exporters, QIA now ranks as the world’s 10th-largest wealth fund, according to the Sovereign Wealth Fund Institute. During the 2008 financial crisis, it was a go-to investor for European firms in need of capital and deployed billions into blue-chip companies such as British bank Barclays.

Fifteen years on, with funds drying up in many markets around the world and demand for natural gas soaring, QIA is once again among a select group of deep-pocketed investors able to bankroll the biggest deals.

“We are transparent in what we do, and we invest for the long term. That is our proposition, and we think companies prefer a partner like that,” Al-Mahmoud said.

Qatar’s tech shift

QIA has been increasing its tech investments, participating in and leading funding rounds by companies all over the world — from Indian food-delivery platform Swiggy to US genomic medicine group Ensoma. It’s now looking more at the semiconductor sector and software, as well as seeking to invest alongside private equity firms on buyouts in the broader tech space.

“We are now finding a higher number of interesting investment opportunities given that terms are starting to become more investor friendly,” said Mohammed Al-Hardan, head of technology, media and telecom investments at QIA. “Although there are a lot of investors chasing opportunities in tech, there are fewer players who can deploy serious capital consistently across the cycle and we are among the few in that group.”

While the bulk of QIA’s software investments will continue to be in the US, it’s looking closely at China, where there is a larger user base and attractive valuations, Al-Hardan said. Some of the large tech-focused US private equity firms that are backed by QIA are also scouting for software bets in the country, he said.

In 2021, QIA set up a Singapore office to give it access to some of Asia’s largest companies and investors. It plans to expand its regional team and make selective senior hires to cover markets like China, India and Japan.

“We realize it’s important to be on the ground, to be able to travel to cities in the region and to meet with the management teams and ensure they understand the benefits of partnering with us,” said Abdulla Al-Kuwari, head of advisory for Asia Pacific at QIA.

The fund is searching for deals across tech, industrials and real estate, among other sectors in Asia, Al-Kuwari said. It led a $45m Series B funding for Chinese biotech Oricell Therapeutics in February and is committing up to $1.5bn in a platform started by James Murdoch and Uday Shankar to invest in media and consumer technology assets in Southeast Asia.

“For QIA, the capital that goes to Asia is only going to increase going forward,” Al-Kuwari said.

European bets

QIA remains one of the biggest sovereign investors in Europe, with stakes in companies ranging from commodities miner Glencore to supermarket chain J Sainsbury and automaker Volkswagen.

While the fund is increasingly looking at early-stage investments in tech-enabled companies in Europe, it will continue to help its blue-chip holdings navigate issues like climate change and energy transition and stands ready to deploy significant capital if required.

“We can deploy capital quickly when the right investment is presented to us,” said Ahmed Al-Hammadi, QIA’s chief investment officer for Europe, Turkey and Russia, who sits on the board of London’s Heathrow Airport. “We also don’t shy away from saying ‘no’. We say ‘no’ more often than we say ‘yes’ when it comes to investments.”

Last year, the fund became a major shareholder in RWE AG with a 9.09 per cent stake. The deal gave the German utility enough capital to buy $6.8bn worth of renewable energy assets from Consolidated Edison.

Home Comforts

QIA is eyeing a more prominent position in the economic growth story of Qatar itself, now that years of heavy spending on hosting the football World Cup are over. Its role at home has historically been focused on stepping in during times of crisis — such as 2008, when it helped to bail out some of the country’s banks.

Last month, QIA set up a $274m (QAR1bn) market-making program to draw foreign investor interest and deepen Qatar’s capital markets. The fund also wants to do more to help the local economy when the private sector can’t step in, according to CEO Al-Mahmoud.

“Our role is that of an enabler, filling gaps in the local economy where the private sector cannot compete,” he said. “We are not here to compete against the private sector.”

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