Competing for Qatari money

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ShardImage source, Getty Images
Image caption,
Qatar's sovereign wealth fund owns 95% of the Shard in London

Everyone wants a piece of Qatar it seems or, more specifically, Qatari money.

The small Gulf state's influence in the UK, and London in particular, is becoming more evident. It is a joint owner of London's newest landmark, the Shard, it stepped in to provide funds for Barclays back in 2008 which helped the bank avoid being semi-nationalised, and has bought a 20% stake in the company that owns Heathrow airport.

The list of what else it owns through its sovereign wealth fund - the government-controlled investment fund - goes on. Harrods, a 20% stake in Camden market, a 26% stake in supermarket Sainsbury's to name but a few.

And according to recent reports, the UK government is now looking to tap up the oil and gas-rich Middle East state for some £10bn ($15bn) for infrastructure projects.

The Commercial Secretary to the Treasury, Lord Deighton, hinted at the move recently. "We have had multiple recent contacts over the last 12 months with many governments and sovereign wealth funds on infrastructure," he told an infrastructure investment forum.

"Strong inward investment into the UK economy has created or secured more than 112,000 jobs in 2011-12, a rise of 19% on the preceding year.

"We hope to be even better and are working with institutional investors - from banks through pension funds to sovereign wealth funds - to ensure that the deepest possible sources of capital are available to the widest possible range of infrastructure projects."

In demand

The UK is not alone in courting Qatari investment.

Debt-laden Greece has been wooing the state, which has already invested in one of Greece's gold-mining projects. Qatar has also agreed to contribute to a fund to reinvigorate disadvantaged suburbs in France.

And it is involved with some African nations to help fund charitable projects, and is looking to invest in China's capital market.

"Living in Qatar, it seems like every country in the world is currently targeting Qatar," says Iain Webster, executive director for Qatar, at the Brand Union, which advises companies on brand strategy, and whose clients include Qatar National Bank and the Qatar Olympic Committee.

Qatar's Emir Sheikh Hamad bin Khalifah Al Thani is one of the world's busiest leaders at the moment, according to Mr Webster.

"Every single week he has bilateral conversations with leaders from all over the world."

The draw of Qatar as an investor is easy to see. At a time when so many western economies are struggling, liquidity is not an issue for the Gulf state.

"Qatar can afford to be a long-term strategic investor and at this moment in time to have someone with the liquidity to provide funds with no pressure for short-term returns is quite rare," says Mr Webster.

But Colin Foreman, news editor of Middle East Economic Digest (MEED), points out the difference between government and private funding.

"It's quite attractive on the sovereign side as an investor," he says, "as you're dealing with a government that has not got a financial issue.

"Where it becomes more tricky is with private funders. I don't think foreign banks are particularly open to that kind of funding."

'Trophy assets'

So what does Qatar look for when choosing where to invest its vast wealth?

Most investments are long-term strategic investments, but they all contribute to the Qatar National Vision 2030 which seeks to shift the country from a carbon economy to a knowledge economy.

The awareness that at some stage its oil and gas resources will dry up and planning for the future draws parallels with Norway, which set up a sovereign wealth fund in 1990 to ensure the country had other sources of income in a "post-oil" world.

Image source, AFP
Image caption,
Qatar's acquisition of Paris Saint-Germain will benefit from Beckham shirt sales

Mr Foreman says investment decisions are based on whether they make economic sense, and whether they can tie back to help the domestic economy.

"They've bought into construction companies before. That is a logical move."

But he adds, "Some of the others are more trophy assets and there are other considerations at play."

For instance, the country has turned its attention to football. In 2011 the Qatar Investment Authority took over French club Paris Saint-Germain, and the Qatar Foundation are the shirt sponsors of Spanish superstars Barcelona.

"Clearly when you buy a football club, there's a different set of rationale - it's not a basic economic decision, it's profile as well," says Mr Foreman.

World Cup infrastructure

Inward investment in infrastructure is also making Qatar a destination for foreign companies seeking lucrative contracts.

The National Vision's aim of preparing for "a new international order that is knowledge-based and extremely competitive" has led to billions of dollars being spent on bringing international university campuses - including Georgetown, Weill Cornell Medical College, and French business school HEC Paris - to the country.

There has also been massive interest in tenders for Qatar's sewage infrastructure and metro projects.

But perhaps more significantly, with Qatar hosting the 2022 Football World Cup, it is set to invest heavily in a tournament that it hopes will raise its profile around the world, and will reportedly spend up to $150bn (£100bn) on infrastructure projects ahead of the event.

With foreign firms eager to cash in on the boom, Iain Webster says UK companies are already well-represented in Qatar and seem well-placed for the future.

Image source, Reuters
Image caption,
Sheikh Hamad hopes the World Cup will raise Qatar's international profile

The UK and Qatar have a unique relationship, he says. "A lot of Qataris seem to me to be real 'anglophiles'. They love London as a city and are avid consumers of British brands. The more Qatar invests in London and the UK, the more the bonds that connect the two countries will be strengthened, bringing valuable benefits to each party."

He points to Qatar UK 2013, which aims to forge new partnerships between the two countries in the fields of art, culture, education, sport and science.

"Any initiative like that is positive for the Middle East because it's had such polarised reporting in the western media."

So with Qatari money up for grabs, both British firms and projects in Britain look well-placed to continue to benefit.

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