EU presses State funds more than US – Dubai
Publish Date: Thursday,1 May, 2008, at 02:51 AM Doha Time
Ahmed bin Sulayem
DUBAI: Europe is pressuring sovereign wealth funds more than the US and may be discriminatory in enacting new investment rules, said the chairman of Dubai World, an investment group with assets of more than $100bn.
“Europe is really putting pressure on the sovereign funds that we’re not seeing from America, yet they’re doing this at a time when the funds are really needed,” Sultan Ahmed bin Sulayem said in a phone interview today from Colombia. If Europe “adds new sets of rules, and we’re going for an investment against a competitor who’s not going through what we’re going through, then that’s not fair,” he said, referring to competition from private equity companies.
Sovereign funds are stepping up efforts to repel European and US demands for more disclosure as the investment vehicles swell with record oil revenue and rising currency reserves. Such funds, whose owners include Kuwait, Abu Dhabi and Singapore, have ballooned to $3.2tn in assets and may gain fourfold to $12tn by 2015, according to Morgan Stanley.
On March 14 European Union leaders called for an international code of conduct governing sovereign funds, leaving national governments the power to shield strategic industries such as defense. On March 20, US Treasury Secretary Henry Paulson and the sovereign funds of Abu Dhabi and Singapore agreed to adopt rules for greater disclosure and to ensure their investments are for economic rather than “geopolitical” purposes.
Even though Dubai World is not a sovereign wealth fund, as a state-owned investment company it’s “put together” with them, Sultan said.
“Oil-importing countries should, theoretically, welcome these investments as they provide a route for recycling petrodollars back into their economies,” Tristan Cooper, a Dubai-based analyst at Moody’s Investors Service, said in an e-mail yesterday.
“Many of the fears surrounding sovereign wealth funds are overdone, and often mask protectionist sentiment among lawmakers” in recipient countries.
Bader al-Saad, head of Kuwait’s $250bn sovereign wealth fund, on April 9 said EU and US plans to force more disclosure could harm the global economy. Increased scrutiny “will result in an adverse impact on global capital flows” and “won’t solve or prevent any future financial crises,” he said at a forum in Luxembourg.
There’s “no history of foreign private equity firms endangering national interests,” Sameer al-Ansari, chief executive officer of state-owned Dubai International Capital LLC, said last month.
In September 2006, Dubai World venture Istithmar World PJSC, Dubai Aerospace Enterprise and Abu Dhabi’s Mubadala Development Co bought 90% of Swiss-based aviation technical services provider SR Technics for $1.3bn as part of a United Arab Emirates plan to build a domestic aerospace industry.
Dubai World, which has assets of more than $100bn including property company Nakheel PJSC and DP World Ltd, the world’s fourth-biggest ports operator, is happy with its current European investments. “The question is whether we’ll do more,” Sultan said.
DP World, which gained six US port terminals when it bought London-based Peninsular & Oriental Steam Navigation Co in 2006 for $6.8bn, triggered a furor among US lawmakers, who said the deal would compromise national security. DP World sold the facilities to AIG Global Investment Group to meet a pledge to jettison the US operations.
The government-owned investment vehicle said last year it would invest as much as $5.1bn to buy 28.4mn shares in MGM Mirage, or about one-tenth of the casino company, and half of CityCenter, a hotel and casino complex in Las Vegas.
Sultan is touring Latin America where there are opportunities to invest in hotels, real estate and mining projects, he said. – Bloomberg

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