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Archived News - November 2008
11/28/2008
As giant financial institutions continue to seek new capital, many turn to sovereign wealth investors. Institutions like Morgan Stanley, UBS, and Citigroup have received capital injections early in 2008. This special report was written about Barclays Plc activities with sovereign investors in recent months leading to November 2008. The report examines certain relationships between the Bank and its investors as well as the background of the new offering. It also entails in detail the capital raising, investors, and other related material to the capital injection.
Purchase: Barclays seeks Sovereign Wealth
11/28/2008
"Paris, 20 November 2008 – The President of the French Republic announced this morning in Montrichard the creation of a Strategic Investment Fund (SIF), which is intended to boost the equity and to stabilise the capital of French businesses. He has decided to entrust the management of this fund to Caisse des Dépôts.
This mission is consistent with Caisse des Dépôts’ identity as a long-term investor that was affirmed in its Elan 2020 strategic plan and enshrined in the recent French law on modernisation of the economy. It accords with Caisse des Dépôts’ calling and experience as a well-informed and wise investor in the service of the public interest. It also extends the mission of management of the France Investment programme entrusted to Caisse des Dépôts via its subsidiary CDC Entreprises. It should be noted that Caisse des Dépôts contributes two-thirds of the total amount of this support programme for SMEs, with a commitment of €2.2 billion over six years.
The setting-up of the SIF is going to enable the commitment to businesses of the Caisse des Dépôts
Group to be boosted by allocating fresh resources to it. The SIF will be a French public limited company (société anonyme), a subsidiary of Caisse des Dépôts, and controlled by it, whose accounts will be consolidated with those of Caisse des Dépôts. It will be endowed, at the start, with 20 billion Euros contributed at par by Caisse des Dépôts from its equity (general section) and by the French State: 14 billion Euros in securities and 6 billion Euros in cash. It will not receive support from the Savings Funds managed separately by Caisse des Dépôts, the uses of which are fixed by law and are allocated in priority to the financing of social housing and urban policy.
The President of the French Republic set out this morning the fund’s guidelines. The fund will be investing in equity in order to promote the development of businesses, whether these are small or medium-sized enterprises. It will participate in the stabilisation of the capital of certain large French enterprises. It will act as a well-informed and wise investor in the service of the public interest, with a long-term horizon, and in accordance with tailored investment policies that will draw inspiration from those of the Caisse des Dépôts Group. Caisse des Dépôts’ Chief Executive Officer will be the Chairman of the SIF’s Board of Directors. The SIF will also be assisted by a policy committee, involving social partners, business leaders and economists in elaborating its main strategic aims. This committee will be chaired by Mr Jean-François Dehecq, the Chairman of Sanofi. The SIF’s investment committee will be chaired by Mrs Patricia Barbizet, the chief executive officer of Artemis. Like the other subsidiaries of Caisse des Dépôts, the SIF will be carrying on its activities under the oversight of the Supervisory Board. It will be submitting to it in particular its strategic policies and its annual management report.
Michel Bouvard, the Chairman of Supervisory Board of Caisse des Dépôts, and Augustin de Romanet, the Chief Executive Officer, are very pleased with the trust thus shown by the President of the French Republic in Caisse des Dépôts and its teams. They will take all the necessary steps for the SIF to be set
up immediately."
read more: Caisse des Dépôts
11/25/2008
Bloomberg reports that, "Barclays Plc won shareholder support to raise 7 billion pounds ($10.5 billion) without surrendering control of its lending or dividends, Chairman Marcus Agius said. The bank, the second largest in the U.K., got more than 85 percent of shareholders to vote in favor of four resolutions calling for the sale of stock mainly to funds from Qatar and Abu Dhabi. Barclays, which is bypassing ordinary shareholders and the U.K.’s rescue plan as it complies with new capital requirements, rose 10 percent in London trading, the most since Oct. 14.
Barclays made the extremely difficult to avoid government restrictions on when it pays dividend, where it lends and the risks it takes, the company said today in a statement. 'We’re in the firing line,' said Agius, who is up for re-election in April and started today’s vote as investors were still shouting questions. Royal Bank of Scotland Group Plc and two other U.K. banks agreed to raise 37 billion pounds in the U.K. bailout. 'They have made it very clear that they think the government will lean on banks in which it has stakes for the interest of U.K. taxpayers,' said Simon Willis, a London-based analyst at NCB Stockbrokers Ltd. who has a reduce rating on Barclays. “That may well have a bearing on profitability.'"
read more: Bloomberg
11/25/2008
Occidental Petroleum Corporation (Oxy) and Mubadala Development Company of Abu Dhabi (Mubadala) today announced the signing of an Exploration and Production Sharing Agreement ("EPSA") with the Ministry of Oil and Gas in the Sultanate of Oman. Under the terms of the EPSA the parties will develop four existing gas fields and explore for potential new discoveries in a newly formed contract area ("Habiba" - Block 62) in Northern Oman. The 20 year agreement covers a 2,269 square kilometre area.
Oxy will serve as operator under the EPSA and hold a 48-percent interest, with Mubadala Development Company holding a 32-percent interest and the Oman Oil Company holding the remaining 20 percent.
"We are pleased to expand upon our existing relationship with Oman and look forward to working with our partners to help ensure that future supplies of natural gas will be available to fuel Oman's economic growth," said Dr. Ray R. Irani, Chairman and Chief Executive Officer of Occidental. "Signing this EPSA is another important step in the implementation of our growth strategy within the region. The development of the substantial natural gas resources contained within the contract area will create significant value for the people of Oman and for our shareholders."
read more: Zawya
11/24/2008
Bloomberg reports that, "Standard Chartered Plc may lose its right to issue Hong Kong bank notes if a Singapore-owned company raises its stake in the lender above 20 percent through a rights offer, Hong Kong’s de facto central bank said.
'We don’t wish a foreign government to have a large influence over our note-issuing banks,' Joseph Yam, chief executive of the Hong Kong Monetary Authority, told reporters in Beijing today. His comments were broadcast on television.
Singapore’s Temasek Holdings Pte, the biggest shareholder in Standard Chartered, may raise its stake to as much as 22 percent from 19 percent as the company is acting as underwriter for part of the bank’s 1.8 billion pounds ($2.7 billion) rights offering. Lenders more than 20 percent owned by overseas governments are barred from issuing bank notes in Hong Kong.
This issue 'is currently in the realm of hypothesis and in any case, it will need the necessary regulatory approvals,' Standard Chartered’s London-based spokesman Arijit De said by phone today.
Yam also said that the rights offer was unlikely to result in a foreign government owning more than 20 percent of the bank. 'We are aware of and respect HKMA’s regulations,' Temasek said in an e-mailed statement, without elaboration.Standard Chartered, based in London, announced the offer today to bolster its finances."
read more: Bloomberg
11/23/2008
Gulf Times reports that "Poland will probably sell shares of the Warsaw Stock Exchange directly to selected investors from the Middle East, scrapping earlier plans for an initial public offering as market turmoil continues. Poland, which holds 98.8% of the exchange, may sell a stake in a private deal next year, after investors including the Kuwait Investment Agency and Qatar Investment Authority expressed interest in “large’’ stakes, Maciej Wewior, a spokesman for the Treasury Ministry, said by phone yesterday. The ministry is waiting for a report from its advisers and may decide on the form of sale in the next couple of weeks, Wewior said, declining to specify the size of the stake to be sold or the timing of the transaction. Poland previously planned to sell 25% to 35% of the bourse in an IPO, and as much as 36% to institutional investors."
read more: Gulf Times
11/22/2008
General Electric Co., down 61 percent this year in New York, is seeking funds from China Investment Corp., Government of Singapore Investment Corp. and at least two other sovereign-wealth funds. Talks are also being held with Temasek Holdings Pte of Singapore and China Safe Investments Ltd., Brussels-based spokeswoman Elma Peters said in a phone interview today. China Investment Corp. is the nation's $200 billion sovereign wealth fund.
Chief Executive Officer Jeffrey Immelt has lowered his 2008 profit target twice and last month he raised an additional $3 billion in the sale of preferred shares to investor Warren Buffett's Berkshire Hathaway Inc. Asian talks follow an $8 billion venture with Abu Dhabi's Mubadala Development Co. as GE taps infrastructure spending outside the U.S., where a recession is deepening. Getting partners to become shareholders has the added advantage of establishing a more stable investor base.
read more: Bloomberg
11/21/2008
ADIA had $7.5 billion injected into Citigroup earlier this year. According to the NY Times, "in a bid to calm nerves, Citigroup officials are meeting with other large shareholders. Last week, Citigroup’s chairman, Winfried Bischoff, traveled to Dubai and met with Sheik Ahmed bin Zayed al-Nahyan, the director of the Abu Dhabi Investment Authority, according to two executives briefed on the situation."
read more: NY Times
11/18/2008
read more: Linaburg-Maduell Transparency Index
11/17/2008
"The U.S. Treasury Department, on behalf of the Committee on Foreign Investment in the United States (CFIUS), issued final regulations governing CFIUS on November 14, 2008. The regulations implement Section 721 of the Defense Production Act of 1950, as amended by the Foreign Investment and National Security Act of 2007 (Section 721). The regulations also codify improvements to the CFIUS process informed by seventeen years of practice. Issued in proposed form on April 21, 2008, the final regulations reflect CFIUS’s careful consideration of all comments received during the public comment period, as described in the discussion that precedes the regulatory text. By increasing clarity and transparency and ensuring that the CFIUS process is efficient, the regulations reinforce the United States’ longstanding commitment to open investment."
Regulations Clarify What Constitutes a Covered Transaction:
 Only “covered transactions” are subject to CFIUS review under Section 721.
Covered transaction: Any transaction proposed or pending after August 23, 1988, by or with any foreign person, which could result in control of a U.S. business by a foreign person.
Greenfield investment: Greenfield, or start-up investment, is not covered.
Asset acquisition: Not a covered transaction if the assets acquired by a foreign person do not constitute a U.S. business.
Long-term lease: May be a covered transaction only if a foreign lessee makes substantially all business decisions concerning operation of a leased U.S. business, as if it were the owner.
Lending transaction: Not a covered transaction unless the foreign person acquires financial or governance rights characteristic of an equity investment, but not of a loan. Imminent default giving a foreign person actual control of collateral that constitutes a U.S. business is a covered transaction – but lenders in the ordinary course may qualify for an exception.
Incremental acquisition: After CFIUS concludes action on a covered transaction, the foreign person’s acquisition of additional interest in a U.S. business is not a new covered transaction.
read more: CFIUS Reforms
11/17/2008
China Investment Corp., the country's $200 billion sovereign wealth fund, has restarted talks to acquire a stake in Australia's Fortescue Metals Group Ltd., the South China Morning Post said, citing people it didn't identify.
CIC may bring in Baosteel Group Corp. and China Shenhua Energy Co. as partners to invest in the iron ore producer, the newspaper reported today. The sovereign wealth fund and Fortescue both declined to comment, while Baosteel and China Shenhua were unavailable for comment, the Morning Post said.
read more: Bloomberg
11/15/2008
According to Bloomberg, "Qatar Investment Authority, the country's $60 billion sovereign wealth fund, plans to make more real estate acquisitions in 2009 as global prices decline and investors sell assets.
'We are looking for prime properties in major cities at distressed prices,' said Navid Chamdia, the authority's head of real estate, in an interview at the Real Estate Investment World conference in Tokyo. 'We will continue to invest in attractive assets we are comfortable with.'
Real estate values are tumbling in New York, London and Tokyo as the global credit crisis has roiled lending and sidelined buyers. New York is poised to have its worst year since 2004 for commercial real estate transactions with deals plunging 61 percent so far. That's created opportunities for the Qatari fund to buy real estate more cheaply and to buy positions in real estate investment funds at a discount from investors and private equity funds, Chamdia said.
The Qatar Investment Authority has been investing in property in the past three years to diversify its holdings. The fund completed its first direct real estate investment in the U.S. in August, joining Boston Properties Inc. to buy the General Motors Building and three other New York towers for $3.95 billion. "
read more: Bloomberg
11/13/2008
According to Reuters, "hedge fund firm GLG Partners said on Monday that it had been approached by a number of sovereign wealth funds or families interested in making an investment, as it reported lower net income and assets. Noam Gottesman, Chairman and co-Chief Executive, said on a call to analysts and journalists that the firm had been approached by 'a relatively good number of people', although he declined to give details of the approaches."
read more: Reuters
11/12/2008
According to Reuters, "a joint venture between Abu Dhabi Investment Company (ADIC) and UBS Global Asset Management plans new funds of up to $1 billion and will invest over $200 million in two Gulf infrastructure projects. The venture's CEO Mark Thompson said on Monday the ADIC-UBS venture will continue to invest in equity in the Middle East-North Africa (Mena) region despite the slowdown in projects due to the liquidity crunch."
read more: Reuters
11/10/2008
Reuters reports that, "state-owned investor Dubai World, which is building the world's tallest tower, is looking at port, logistics and urban development investments in Russia and is not slowing any of its projects due to the global financial crisis, a senior official said on Monday.
'We are continuing with our projects without stopping or slowing down internationally or regionally,' Dubai World Secretary-General Farid Ahmed told reporters, adding the firm was not reconsidering the $40 million tower development. Ahmed said Dubai World had no problems funding its projects, but declined to elaborate on how the company would raise financing in the future given tighter global credit markets."
read more: Reuters
11/9/2008
The United States will have to work closely with the G20 to help steer the world out of the financial crisis and to overhaul the international financial system, Soud Ba’alawy, executive chairman of Dubai Group, said on Saturday. “I think the American administration will have to work closely with the G20. America is still the super power, it represents 45 per cent of the world economy and what goes on in America has impact on the whole world. They will have to work to resolve this situation,” Ba’alawy told a Press briefing at the World Economic Forum’s inaugural Summit on the Global Agenda in Dubai. The G20, an informal grouping of the world’s top developed and developing economies, will hold a summit next week in Washington.
Ba’alawy said the crisis has shaken the world’s confidence on the global financial system. “My view is that today we are facing a situation where every belief that we had in the past 30 years has to be questioned. The system itself needs to be overhauled.” However, he said the global financial crisis has also thrown up some opportunities. “I think this is a big opportunity for the emerging markets. If emerging markets take this crisis seriously this is a great opportunity for emerging market countries and companies.” He said sovereign wealth funds should also take advantage of the situation. “Protectionism is natural,” Ba’alawy said. “Nothing will change. But there will be times like this when sovereign wealth funds will be welcomed big time.”
The World Economic Forum, in partnership with the Government of Dubai, opened the inaugural Summit on the Global Agenda in Dubai on Friday. The Summit is a unique and timely gathering of the world’s 700 most innovative and relevant minds — leaders from academia, business, government and civil society from around the world. Organised by the Forum’s Network of Global Agenda Councils, the Summit provides a platform to share ideas and collaboratively address some of the key issues on the global agenda — with the aim of laying out solutions to some of the most pressing issues. Mohamed A. El Erian, Managing Director of Pacific Investment Management Company, better known as PIMCO, said; “The election of Senator (Barack) Obama provides a unique opportunity for leadership both domestically and internationally. You need change and you have a very critical agent of change in the President Elect.”
read more: Khaleej Times
11/8/2008
The Telegraph reports that "Stephen Hester, the new chief executive of Royal Bank of Scotland, is to court sovereign wealth funds about buying shares in the stricken lender as part of its £20bn capital-raising. Mr. Hester will meet representatives of a number of investment funds backed by foreign governments even as RBS prepares for the Treasury to become the bank's biggest, and possibly majority, shareholder. The meetings will take place as part of a roadshow for the fundraising, during which Mr. Hester will hold talks existing and potential new investors.
'We are going to be talking to anyone with money and they [the sovereign funds] have a lot of money,' said a person familiar with Mr. Hester's plans.
It was unclear last night which investment bodies he would meet, but people close to RBS dismissed any parallel between his prospective conversations and the investments made last month by Abu Dhabi-based and Qatari investors in Barclays. Mr. Hester declined to comment on talks with potential shareholders."
read more: The Telegraph
11/7/2008
Reports say that, "a joint venture fund launched by Mubadala and General Electric (GE) will be up and running within a year with a credit line of $50 billion (Dh183.5bn). Abu Dhabi Government-owned Mubadala and US-based GE signed an agreement to establish the 50-50 fund in New York last July. 'Basically the deal is that GE and Mubadala will each invest $4bn in a fund with up to $50bn of borrowing capability to invest in infrastructure projects around the world,' said GE Middle East and Africa General Manager Isam Moursy.
'It is not really restricted to the UAE or Middle East.'
He said Mubadala and GE, a multinational technology and services conglomerate that has been in the UAE since 1974, were currently obtaining certification to allow the fund to operate in the region."
read more: Emirates Business
11/6/2008
AFP reports that, "spotting an opening in the global fight for talent, China's ambitious financial institutions are planning recruiting trips to London and Wall Street on the wounded financial titans' home turf. Sovereign fund China Investment Corporation has begun a global search, multi-billion dollar Chinese-French fund Fortune SGAM plans interviews on Wall Street and Shanghai's government is headed to London and New York next month with job offers in hand. 'There are layoffs on Wall Street since the crisis but China's financial industry is still in its infancy and is hungry for talent,' Pei Changjiang, chief executive of the Fortune SGAM Fund, told AFP."
read more: AFP
11/5/2008
Bloomberg reports that, "Temasek Holdings Pte, Singapore's state-owned investment company, will sell its Indian mutual fund venture to Religare Enterprises Ltd. Lotus India Asset Management Co., a joint venture between Temasek's unit Fullerton Fund Management Group, and Sabre Capital Worldwide Inc., had assets under management of 54.58 billion rupees ($1.13 billion) as of October, according to data compiled by Bloomberg."
read more: Bloomberg
11/4/2008
Nevada gambling regulators have given preliminary approval for Dubai World to invest more than $6 billion in casino giant MGM Mirage Inc. The state Gaming Control Board gave its OK on Wednesday for several subsidiaries of the investment arm of the Persian Gulf state to proceed to Nevada Gaming Commission consideration later this month. Dubai World controls 9.4 percent of MGM Mirage's stock and owns 50 percent of the under-construction $9.1 billion CityCenter development on the Las Vegas Strip. Dubai World and MGM Mirage will have to be licensed for CityCenter sometime next year.
read more: International Herald Tribune
11/4/2008
Zawya reports that, "Iran's central bank warned on Monday that if oil prices fall under 60 dollars a barrel, the country's oil-dependent economy will struggle to survive the world financial crisis, the ISNA news agency reported. "If average price of oil stays at 60.6 dollars in the remaining five months of the current year (to March 2009), we can get through this crisis safe and sound," the bank's deputy for economic affairs, Ramin Pashaifam, was quoted as saying. Pashaifam said that with a minimum price of 60 dollars, Iran will still need to use savings from oil revenues to cover its budget needs. "In a case of 60 dollars per barrel for oil, no cash will remain in the Oil Stabilisation Fund," he said, referring to a fund which aims to guard against price fluctuations and to finance private sector projects."
read more: Zawya
11/4/2008
Baku. Rashad Suleymanov, Chairman of the National EITI Committee, a member of the EITI Board and the Executive Director of the State Oil Fund of the Republic of Azerbaijan Shahmar Movsumov participated at the EITI Board meeting which was held on 29-30 October, 2008 in Athena.
Importance of EITI Resolution adopted by UN General Assembly was emphasized at the meeting and Azerbaijan’s initiative in submission of this Resolution to the UN General Assembly was appreciated.
It was also emphasized that Azerbaijan is the first country which officially launched the Validation process and it was praised by other Board members.
Preparation works for the International Conference which will be held on 16-18 February, 2009 in Doha were discussed at the meeting.
read more: APA-ECONOMICS
11/2/2008
News Limited reports that, "Future Fund chairman David Murray says it is not the role of the $63 billion fund to bail out troubled mortgage-based investment funds. Some mortgage-based investment funds have had to be frozen after they experienced an exodus of funds, following the federal government's guarantee of bank deposits. Market-linked funds are not covered by the guarantee. Last week, Prime Minister Kevin Rudd said that larger and more liquid institutions - including the major banks - could provide liquidity to various market-linked investment vehicles within the financial system by buying their securities. The federal government had asked Mr Murray to assist Treasury in its talks with relevant financial institutions on the matter.
Asked if a sovereign wealth fund such as the Future Fund would invest in the mortgage funds to help them through the crisis, Mr Murray told Sky News' Sunday Business program that the Future Fund operated on commercial principles, not political principles."
read more: News Limited
11/2/2008
The National reports, "the growth of Sovereign Wealth Funds (SWFs) is one of the most notable characteristics of the current wave of globalisation. The UK government welcomes the positive role that SWFs such as those in the UAE and Qatar have in the efficient allocation of capital and the benefit that they bring to the global economy by taking a long-term view of their investment decisions. To ensure a transparent environment that supports SWF investment, we have fully endorsed the lead taken by the IMF to develop a common set of principles. And, of course, the UK, with its history of open investment, will continue to be a natural place for SWFs to invest."
read more: The National
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