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Tue 20 Jul 2010 03:04 PM

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SWFs focus on Mideast, emerging markets - KPMG

EXCLUSIVE: Private Equity exec says KPMG working with Gulf SWF on China deal.

SWFs focus on Mideast, emerging markets - KPMG
NEW MARKETS: Financial services giant KPMG is also working with a Gulf SWF on investment in China.

The Gulf’s sovereign wealth funds (SWFs) are refocusing their energies on investing in their home markets, as well as emerging market locations, a UAE-based partner with KPMG has said.

“If we go back to before the crisis, there was a lot of investment taking place [by Gulf SWFs] internationally. There was investing in private equity and in several different asset classes, but what we’ve seen in the last couple of years is much, much more focus in the region itself,” KPMG UAE country head of private equity and sovereign wealth funds Vikas Papriwal told Arabian Business on Tuesday.

“I made a point about incubation of venture capital type structures, and if you look at some of the SWFs in the region, there’s a lot more of that now. There’s much more focus on the region, and on getting ideas to work for the region – it’s a much bigger trend.”

The executive also revealed that KPMG was also working with an unspecified Gulf SWF with regard to an investment in China, just days after the Qatar Investment Authority (QIA) bought into the $10.5bn AgriBank IPO.

“We are working on something that’s going into China by someone in this region,” Papriwal said.

“So clearly they [Gulf SWFs] are looking at opportunities where they can grow a certain market for the benefit of their home market, or actually incubate some of the technology back into the region.”

Papriwal was speaking on the sidelines of a press conference to announce the release of the Gulf Venture Capital Association’s report into the region’s private equity market. MENA funds pulled in a total of $1.25bn in the first quarter of 2010, an eighteen percent increase over the whole of last year.

The KPMG executive declined to speculation on what the full 2010 figure might be, citing the significant number of variables involved.

Huge investments in more traditional economies have left some Gulf SWFs after losing billions via investments in banks such as UBS and Citigroup.

In May this year, UAE central bank governor Sultan Bin Nasser Al Suwaidi said that SWF source countries might stop investing in Western countries altogether and instead focus on the region’s megaprojects.

But in early July, Abu Dhabi Investment Authority (ADIA) strategy unit head Jean-Paul Villain said it had no plans to cut its exposure to Europe. With assets of between $500bn and $700bn, ADIA is considered to be the largest SWF in the world.

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Kaptain 9 years ago

The China-o-phobia has just begun. Just wait and watch what the red dragon has to offer. China itself was preparing for this moment. While the other potential stakeholders give away their places, China would be much more than ready to take the global reigns. These are but the first signs.

Sam the Sham 9 years ago

GCC SWFs in China? How is this a story? How is it an exclusive? They have been present there for at least three years in various guises. It is fascinating that they are entering the market when other foreign businesses are finding that rules there are making life almost intolerable. Look at what the CEOs of General Electric, Siemens, BASF etc have been complaining about. Foreign banks are also struggling and they say it is getting worse. Here's a question: are the GCC SWFs going to be stung by operating in an opaque market like China?