Government sector Technology

Qatar Sovereign Wealth Fund eyes investments at lower valuations

Qatar investment covid19


After the blockade by the Saudi led quartet, the tiny oil rich nation of Qatar has made every effort to become self-reliant. During the Covid-19 pandemic too, the Qatar controlled sovereign fund is planning to purchase assets at low prices. Ali Sharif al-Emadi, the finance minister of Qatar said that the funds main focus is going to be international investments. This comes amid backlash against China controlled sovereign funds for trying to buy out distressed assets during coronavirus fueled recession.

The QIA is looking to invest in various sectors, specifically in the health and tech industries,” Mr Emadi, who is on the QIA’s [Qatari Investment Authority] board, told the Financial Times. As reported by FT, QIA is looking to invest in health and tech sectors despite the shortcomings presented by the pandemic. This is a considerable shift as the QIA’s focus has been on pumping the money into the domestic economy since the embargo by the other members of the Gulf Cooperation Council.

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This is not the first time the fund’s focus was on international investments. During the 2008 financial crisis, the fund invested in entities like Barclays, Credit Suisse, Volkswagen and Porsche. Not only the sovereign fund of Qatar, but also other cash rich states of Gulf are eyeing investments amid lower valuations. Qatar, the world’s largest exporter of liquefied natural gas, is set to host the soccer world cup 2022.

What is Qatar’s Sovereign Wealth Fund?

A sovereign wealth fund is a fund owned by the government of a sovereign nation. This fund, usually, acts as investment wing for the respective country. The receipts of this fund come from the reserves of the Central Bank, usual revenue of the government etc. They help in building the economy of the home country and also are usually investing in countries which serve their best interests. A lot of countries have their own sovereign wealth funds. The Norway Government Pension Fund Global is the biggest among such funds with more than $1 trillion in its assets.

Recognizing the volatility of the prices of oil and other allied resources, gulf nations started to invest in properties, companies and even sports teams across the world, as part of diversification. The recent contribution of the Kingdom of Saudi Arabia to the $100 billion Vision fund managed by Soft Bank is also part of one such effort. These funds are owned by the respective governments.

Qatar Investment Authority’s predecessor was Supreme Council for investment of State Reserves which was established in 2000 to invest the state revenue surplus. This wing materialised into Qatar Investment Authority formally in 2005. The fund was given to third party managers until 2008 and later started to take part in direct investments. However, the activity came to near halt for an amount of time during the embargo. This fund of more than $300+ billion has always been in search of technologies to invest in. Although there are allegations of sovereign wealth funds being used to manipulate small countries with sheer huge numbers, they do act as catalysts in the economic activity in a given sector (to some extent).

Qatar Investment: What this means for the Tech and Health Sectors?

As the Covid-19 pandemic ravages the world, it is natural to see investments being pledged in the health sector. After all, this realisation is late but not useless. There are plenty of viruses out there to fight. However, the falling tech sector needs a boost. It is not the case that a small amount from the fund would boost technology sector across the world. However, such act surely develops a positive sentiment for investments in technology and allied sectors. It may be noted – Barzan Holding Company, which is affiliated with the Ministry of Defense, Qatar has recently announced production of artificial respiratory machines in partnership with US company Wilcox.

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Teja

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