Qatar aims to expand power with corporate giants
Dubai, September 11, 2012
By Una Galani
Qatar is expanding its reach. The Gulf state has over recent years increased its economic and political influence by using its sovereign fund to snap up high profile stakes worth billions of dollars in public companies in Europe, Asia, and the US.
Now bankers are licking their lips in anticipation of an M&A wave as Qatar seeks to extend its footprint by supporting the international expansion of homegrown firms.
It has already been an acquisitive year for Qatari companies. Qatar Telecom took control of Iraqi mobile operator Asiacell. Qtel has offered $2.2 billion to buy the 48 percent of Kuwait's Wataniya that it doesn't already own. Qatar National Bank has taken control of Iraq's Mansour Bank, and bought 49 percent of Libya's Bank of Commerce and Development. QNB also raised its stake in the UAE's Commercial Bank International and is in talks to buy Societe Generale's 77 percent stake in Egyptian bank NSGB .
The government, which controls both listed entities, is supporting the expansion. Qtel's $1.9 billion rights issue in May was backed by the state. QNB, meanwhile, is flush with excess capital as the country pushes ahead with a decade-long $200 billion infrastructure rollout. The strong domestic market allows the bank to fund its ambition to become an "iconic" regional brand.
Using its own companies or specialised vehicles to invest its wealth makes sense for Qatar, which has over $30 billion to deploy this year alone.
Due to political considerations, it hasn't always been easy for the Gulf state to invest within the region. That's easier now that a number of authoritarian regimes have fallen. Moreover, investments by experienced corporate entities don't tickle the pride of sensitive host governments like sovereign-backed financial bets tend to do.
Qatar Mining, Hassad Food (charged with ensuring food security), Qatar Petroleum and Industries Qatar are just a few of the Qatari names expected to start raising their profile in the coming months by snapping up overseas assets.
Qatar's sovereign fund conducts many of its stake purchases through its in-house trading desk. But government-related entities still rely on external expertise for acquisitions. This push to shore up international influence through corporate entities will keep advisors busy. -<!--Reuters-->
* The author is a Reuters Breakingviews columnist. The opinions expressed are her own