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QIA fund expected to double in size by 2010

DUBAI — The Qatar Investment Authority (QIA), the $60 billion sovereign wealth fund backed by the Qatar government, is expected to double in size by 2010 with up to 40 per cent of its investments in Asia, the rest in Europe and the US, according to research carried out by Standard Chartered with input by Oxford Analytica.

There is a particular focus on consumer-oriented export industries and financial institutions.

Among the deals the QIA is seeking to close in order to diversify its assets and build its portfolio in Europe, is the UK supermarket chain, J Sainsbury plc. Since the investment fund Delta Two acquired a 25 per cent stake in the supermarket earlier this year, it has been expected to launch a full bid for $21.7 billion.

The takeover offer has hit a snag, however, as pension fund trustees and the Sainsbury family refuse to approve it over fears that the supermarket will be saddled with a high level of debt. Consequently, Delta Two is seeking to increase the cash component of its offer by $1 billion. But it only has until November 8 to find the money, the deadline laid down by the regulatory authorities. If Delta Two fails to make an offer by this date it would have to wait another six months before it could bid again. Amid fears that there will not be enough time for Delta Two to raise the funds, Sainsbury's share price dropped 2.3 per cent on Friday.

Quoted by Bloomberg on Friday was Christopher Gower, an analyst at MF Global in London, who commented: "The market feels that Delta Two are having problems with funding," and added: "There have been rumours that the Qataris don't have as much cash rolling around as people had presumed." However, he is also said that he has "few doubts" that Delta will ultimately secure the money.

As for closing deals in financial services, the QIA has chalked up a 9.98 per cent stake in the Nordic and Baltic exchange OMX. It has also built up a 23.5 per cent holding in the London Stock Exchange (LSE), after buying 3.5 per cent of Nasdaq's shares to add to its existing 20 per cent stake.

Such is the QIA's determination to ensure it is one of the LSE's largest shareholders that it is reportedly in talks with Borse Dubai, which has a 28 per cent share of the LSE, to swap its holding in OMX for a percentage of Borse Dubai's shares in the London exchange.

QIA's other investments include 100 per cent ownership of Four Seasons Healthcare in the UK; a 5.1 per cent stake in the French company Lagardere; a 97.3 per cent holding of BLC Bank in Lebanon and a 5 per cent share in the Singapore based, Raffles Medical Group.The QIA was also a co-investor in Dubai International Capital's July 2007 purchase of a 3.12 per cent stake in European Aeronautic, Defence & Space Co. (EADS).

Standard Chartered also cites the QIA as being among the world's most secretive sovereign funds along with those in the UAE, Kuwait, China, Qatar, Brunei, Venezuela, Taiwan and China.