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Mon 15 May 2017 08:19 AM

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Qatar's sovereign wealth fund looks to Canada

QIA CEO’s meeting with the business community is a sign of future opportunities for both countries

Qatar's sovereign wealth fund looks to Canada
QIA CEO Sheikh Abdulla Bin Mohammed Bin Saud Al Thani (left) meet Canadian Prime Minister Justin Trudeau during the Qatari leader’s visit to Canada.

If you want to measure the growing influence of the GCC’s stable of sovereign wealth funds (SWFs), look no further than the quiet visit to Canada by top leaders of the Qatar Investment Authority (QIA).

Sheikh Abdulla Bin Mohammed Bin Saud Al Thani, the QIA’s CEO, held meetings during the late April trip with key Canadian government and private sector leaders — including Justin Trudeau, Canada’s Prime Minister, who tweeted a photo of himself with Sheikh Al Thani. The QIA also met with representatives of Canada’s major public sector pension plans, such as the Toronto-based OMERS pension fund.

While few Canadian pension funds match the size of QIA’s $335bn-plus in assets, they all share a common imperative with the Authority — they need to diversify investments beyond their own borders as a way to better manage risks.

In his personal presentation, Sheikh Al Thani combines a calm, diplomatic air with the keen observational powers that one would expect to find in someone who has completed formal training as a military pilot.

Studying investment opportunities in other countries, weighing them and then making a decision on whether to proceed — the sheikh has also practiced this for many years, including during his time at the helm of Qatar’s Ooredoo Group, when it expanded ambitiously into emerging markets, such as Myanmar.

Sheikh Al Thani’s diplomatic skills must have proved helpful on the trip because the Canadians have for months been searching for foreign investors to help them launch a new financial institution to support the construction of badly needed infrastructure projects across their vast country.

Trudeau was clearly pleased to tweet his photo with the Sheikh, but what the PM and his advisers would have no doubt preferred to announce was a commitment of money from the QIA to this Canadian “infrastructure bank”.

On the QIA side, Sheikh Al Thani may have been surprised to hear, just prior to his entering the country, that the Canadians have abandoned the idea of potentially selling the country’s major airports to interested buyers. Such assets, with their steady cash flow and key role in a modern connected economy, would be highly prized parts of any major institutional investor’s portfolio, including the QIA.

In any event, the QIA delegation entered Canada quietly, and left just as quietly — it made no public statements regarding the fund’s intentions in Canada.

Beyond the photo with the PM, the Canadian government said nothing.

That doesn’t mean the trip was a failure. SWFs, whether in the GCC or elsewhere, have the luxury of thinking and investing for the long term. Sheikh Al Thani can afford to look before he leaps.

Ian MacEachern, a Toronto-based expert on pension fund-government relations, sees the QIA visit as another sign of how perceptions of the GCC SWFs — and investment from the GCC in general — are changing.

“Things have certainly shifted from the days of the Dubai Ports World controversy,” he said. “In contrast to that event, the Canadian government has welcomed the QIA with open arms, and the time spent with the Prime Minister shows that the organisation has strong political acceptance as a prospective foreign direct investor. That’s a great edge  for the QIA to have. On the other hand — it can create expectations that the QIA will soon announce some major investment in the country, when the reality may be that the QIA prefers to bide its time and hunt for quality before investing.”

Added MacEachern: “The time is certainly right for the QIA to substantially enter the Canadian market. The question is — how? Rather than feel they must make a statement by announcing a large investment in some signature asset, I would suggest the QIA look at some lower-key co-investment opportunities, alongside Canadian partners — whether pension funds or other institutional investors — in a province such as  Saskatchewan, Alberta, British Columbia or Quebec. As with the offices it is opening across the US, the QIA can use these investments in Canada to build new relationships and firm up its position in North America. Indeed, given how close Canada-US economic ties are, it’s arguable that small successes in Canada may help pave the way for larger future opportunities in the US.”

Wise diplomat that he is, Sheikh Al Thani wore a small lapel pin with Qatari and Canadian flags side-by-side in his meetings with the Canadians, demonstrating a desire for cooperation with his hosts. He knows partnerships need time to mature. With patience on both sides, new Qatari-Canadian partnerships can emerge from the QIA trip.

Just don’t expect results overnight.

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