Mumtalakat eyeing real estate bargains, sukuk issue

EXCLUSIVE: Bahrain’s $10bn SWF to eye asset classes other than private equity.
Mumtalakat eyeing real estate bargains, sukuk issue
MONEY WISE: Mumtalak’s investments include Gulf Air and a 49 percent stake in National Bank of Bahrain. (Google Images)
By Soren Billing
Fri 15 May 2009 11:20 AM

Bahrain’s $10bn sovereign wealth fund is looking to snap up international real estate bargains and may tap the  Islamic debt market to finance parts of a commercial development around the Bahrain International Circuit.Mumtalakat wants to diversify away from private equity into other asset classes, including real estate, it’s chief executive said.

“We are looking to invest across asset classes, so we are going to be allocating funds to third party managers. These will be traditional funds, private equity and real estate,” Talal Al Zain, chief executive of Mumtalakat told Arabian Business on Friday in an interview at the World Economic Forum in Jordan.

Mumtalakat is also looking at making direct investments in real estate through its Bahraini real estate subsidiary and abroad.

“On the international side we have seen big drops in values, especially in the United Kingdom and Japan. There are some drops in the United States,” Al Zain said.

“I’m looking at North America, I’m looking at Europe and I’m looking at Asia.”

Al Zain said in February that he plans to invest half the fund in international markets, which currently only accounts for around 2 percent of its holdings.

In March he said that Mumtalakat doesn’t expect to divest its holdings in local firms for a year as low market valuations make the current environment “more of a buyer’s market”.

The fund is also the second largest shareholder in the McLaren Group, a group of companies focused around Bruce McLaren, a Formula One constructor and the founder of the eponymous UK Formula One team.

McLaren said in April that its automotive division, which makes street legal cars using racing track technology, will be spun off and that 49 percent stake, worth GBP250m, will be sold to investors.

UK media said Mumtalak would be interested in investing in the project if the owners can prove that it is commercially viable.

“We are going to maintain our [30 percent] ownership. Would I be interested to put more money into the company? I’m seeing fantastic potential. If I need to, I will consider it,” he told Arabian Business on Friday.

Mumtalak’s investments include Gulf Air and a 49 percent stake in National Bank of Bahrain.

Al Zain said he was not concerned with growing competition from UAE based carriers Etihad and Emirates and that Gulf Air’s primary aim is to serve the business community of Bahrain.

The fund’s portfolio of companies also includes the Bahrain International Circuit, where it plans to build a $1bn motor sport themed commercial development that will feature a convention facility, a range of mid-range to luxury hotels, and a multi purpose indoor arena .

Construction is expected to start in the first quarter of next year.

“We are looking to the private sector to come in and lead this project from an investment point of view. Most of the equity we expect to come from the private sector, and probably we will go to financial institutions for financing,” said Al Zain.

Mumtalakat will be tapping “all available instruments”, including sukuks and syndicated loans, for the project, he added.

The fund, known for being the most transparent Gulf SWF, will be releasing its annual results shortly. These will show a moderate drop in value, Al Zain said.

“We will be impacted but it should be a very small drop,” he said.

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