Word: dhabi
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...ever. The investments by GIC and Abu Dhabi, part of the United Arab Emirates, marks a turning point of sorts for SWFs. These enormous pools of wealth, controlled by governments in countries that have been getting fat off high oil prices and a booming global economy, are viewed suspiciously by those who fear foreign powers might use them to gain competitive advantages or push political agendas. But now, thanks in part to the bank deals, some fears have been allayed; companies in need of capital are courting investments from oil- and gas-rich states such as Abu Dhabi and Russia...
...other words, up to 12.4% of a conservative Swiss bank was sold to foreign entities. Weeks before, shaky Citi, also in need of capital to repair its subprime-holed balance sheet, was handed a lifeline by a similarly unlikely rescuer. The Abu Dhabi Investment Authority, a $625 billion sovereign wealth fund (SWF) run by the tiny Persian Gulf emirate, announced it was forking over $7.6 billion for a 4.9% stake in Citi. Though Citi still faces difficulties, the cash infusion helped stabilize its plunging stock price and signaled to rattled markets that money was available to help subprime victims...
...surplus foreign exchange to play with--and because of the falling U.S. dollar, they are increasingly interested in investing their cash where it can earn greater returns than it would from U.S. Treasury debt, the traditional haven. The largest SWFs--the so-called Super Seven, comprising China, Russia, Abu Dhabi, Kuwait, Norway and two Singapore funds--control up to $1.8 trillion. By 2011, assets held by SWFs worldwide are projected to grow almost fourfold, to nearly $8 trillion, according to Merrill Lynch. By comparison, hedge funds--unregulated private investment pools--control a paltry $1.5 trillion...
That's a conservative strategy, considering the bargains that may be available from investing in subprime-stressed financial institutions in the West. After all, Abu Dhabi's SWF will reap an 11% annual yield from its Citigroup stake, nearly double the dividend yield currently available to ordinary shareholders. Having been burned once by Blackstone, the Chinese are now twice shy. But other sovereign wealth funds out there are flush with cash--and fortune favors the bold.n
...That's a conservative strategy, considering the bargains that may be available by investing in subprime-stressed financial institutions in the West. After all, Abu Dhabi's SWF will reap an 11% annual yield from its Citigroup stake, nearly double the dividend yield currently available to ordinary shareholders. Having been burned once by Blackstone, the Chinese are now twice shy. But other sovereign wealth funds out there are flush with cash - and fortune favors the bold...