Out-Law / Your Daily Need-To-Know

Qatari sovereign wealth fund teams up with China's Citic Group to invest $10bn in China

Out-Law News | 05 Nov 2014 | 4:12 pm | 1 min. read

The Qatar Investment Authority (QIA), which operates the country's sovereign wealth fund, has teamed up with Chinese state-backed investment firm Citic Group to create a $10 billion fund that will invest in China, its chief executive has said.

Speaking at an investment forum hosted by QIA in Beijing, Ahmed Al Sayed also told reporters that the fund planned to expand its Chinese office as part of plans to invest between $15bn and $20bn in Asia over the next five years.

"As a global fund, we need to diversify asset allocations and geographical location," said Al Sayed, in comments reported by Reuters.

Adding that many companies in China had solid "fundamentals" that made them attractive as long-term investment propositions, Al Sayed said that there were "a lot of companies here, a lot of assets ... which give you long-term sustainable returns".

QIA and Citic will each own a 50% stake in the fund, according to the terms of a memorandum of understanding signed by each of the institutions. According to Al Sayed, possible areas of investment include China's property, infrastructure and healthcare sectors but the QIA would look at "any promising investment".

The QIA was set up in 2005 to invest surplus revenue from Qatar's oil and natural gas supplies in non-energy and international markets, as part of its stated strategy to minimise the risks of Qatar's reliance on energy prices. It holds an estimated £170bn in assets. Among its highest profile investments are its stakes in Barclays Bank, the Volkswagen Group and Sainsbury's, and its ownership of the London department store Harrods.

The fund is also an investor in Citic Capital Holdings Ltd, an alternative investment company backed by Citic Group.

This week, the Chinese and Qatari central banks announced that they had entered into a three-year reciprocal currency swap agreement worth 35bn renminbi (£3.6bn). The swap line will "facilitate [renminbi] trade and investment and provide liquidity and support for financial stability", according to a statement from Qatar Central Bank.