Gulf spat threatens to slow Qatar’s RM1.4t empire

DUBAI • The windfall from being the world’s largest exporter of liquefied natural gas (LNG) has allowed Qatar to amass about US$335 billion (RM1.43 trillion) of investments around the world through its sovereign wealth fund. Now, a diplomatic spat with neighbouring countries threatens to hamper the Qatar Investment Authority’s (QIA) ability to continue making headline-grabbing global deals.

Saudi Arabia and three other Arab countries cut off most diplomatic and economic ties to Qatar on Monday in an unprecedented move designed to punish one of the region’s financial superpowers for its ties with Iran and Islamist groups.

“The potential risks that Qatari investors face, including the QIA, are going to increase and new deals are probably going to become more difficult to complete and face greater scrutiny,” said Sven Behrendt, MD of political risk consultant GeoEconomica GmbH. “Qatar has walked a fine line supporting extremist groups elsewhere in the Arab world, which has provoked this reaction from its neighbours.”

Here’s a look at some of Qatar’s biggest international investments:

• Volkswagen AG.

The QIA is the biggest share-holder in German carmaker Volkswagen, with a stake worth almost US$11.6 billion, including preferred shares, according to data compiled by Bloomberg. That makes it the QIA’s second-biggest listed equity investment after its nearly 52% holding in Qatar National Bank QPSC.

• Rosneft Oil Co.

In December, commodity trader Glencore plc and Qatar teamed up to buy an US$11 billion, 19.5% joint stake in Russia’s largest oil producer from the state. The deal gave the QIA a holding of 9.75% in Rosneft and was one of the biggest investments in the global-energy industry last year, despite attempts by the US and Europe to economically isolate Russia with sanctions following Russian President Vladimir Putin’s incursion into Ukraine.

• Glencore plc.

The QIA also played a pivotal role in Glencore’s US$29 billion takeover of Xstrata plc in 2012 after demanding the Swiss commodities trader boost its offer for the diversified mining group, in which it had built a stake of more than 10%. That merger left the QIA with an 8.49% stake in Glencore, worth US$4.51 billion, according to data compiled by Bloomberg.

• Deutsche Bank AG.

Qatar’s royal family asked Germany’s financial regulator for approval to boost its stake in Deutsche Bank to more than 10%, people familiar with the matter said last month.

Former Prime Minister Sheikh Hamad Jassim Jabr Al Thani and the former emir of the country, Sheikh Hamad Khalifa Al Thani, hold a joint

stake in Deutsche Bank of just under 9%, according to people familiar with the matter. Their latest regulatory filing shows a combined stake of about 6.1%.

• Barclays plc.

The sovereign wealth fund joined a two-stage £12 billion (RM66.17 billion) fundraising to help Barclays avoid a state bailout during the financial crisis of 2008, with the 6% stake in the British lender now worth US$2.76 billion, Bloomberg data showed. The UK Financial Conduct Authority re-opened an investigation into the Bar- clays deal in March, despite issuing a fine in the case four years ago.

• Brookfield Property Partners LP.

Brookfield Property Partners LP and QIA formed a joint venture on Manhattan West, an US$8.6 billion mixed-use project under construction on New York’s far west side, the companies announced in 2015.

The QIA will acquire a 44% stake in the project and opened an office in New York as part of plans to invest US$35 billion in the US by 2020 to diversify its oil holdings.

Plans to boost US investments may now suffer as a result of the diplomatic row with other Arab countries, Behrendt said.

“If this incident intensifies the debate about Qatar’s links to extremist forces, and the role that such forces play in global terrorism, companies should look into this, at least from a risk perspective,” he said. — Bloomberg