EM: Turmoil May Change Sovereign Fund Strategy


By Anita Hawser

The investment activities of sovereign wealth funds in some of the oil-rich countries in the Middle East and North Africa are being scrutinized with increasing interest by investors as political unrest continues to unfold in the region.

In its 2011 Sovereign Wealth Fund Review, published in March, UK-based alternative assets data and analysis provider Preqin says unrest in the Middle East and North Africa could significantly change the investment policies of sovereign wealth funds. The review’s data in terms of assets under management are sometimes estimates, as not all funds publicly disclose or confirm their holdings.

The Libyan Investment Authority (LIA), which Preqin estimates has assets worth $70 billion, has invested in a number of European companies, including the Financial Times’s owner, Pearson, and Italy-based bank UniCredit. Since the onset of unrest in the country, both Pearson and UniCredit have moved to restrict the rights of their Libyan shareholders in line with EU and UK sanctions against the Qadhafi regime.

Sam Meakin, managing editor of the 2011 Sovereign Wealth Fund Review, says the LIA was free to invest Libya’s oil wealth over the past few years but that its mandate could change, depending on who is in control of the country in the coming months. He said the SWFs of Algeria and Bahrain could also be affected by the political unrest. “Collectively, the Mena-based SWF’s have hundreds of billions of dollars in assets, and changes in their investment policies would be widely felt,” he points out.