(January 27, 2014) — One of the world’s largest sovereign wealth
funds has announced it will expand its investments in western infrastructure.
The Kuwait Investment Authority (KIA), which is thought to
have $386 billion under management according to the Sovereign Wealth Fund
Institute, will increase its infrastructure investments in the US, the UK, and
other European markets in the coming months.
The KIA is a well-known player in infrastructure already. Last
year, the fund was part of a Canadian-led consortium that bid for the UK’s Severn
Trent water company, but eventually walked away after the company refused to
engage in talks before a bid deadline expired, according to media reports.
Speaking to pan-Arab channel al-Arabiya, Managing Director Bader al-Sa’ad said he was also
concerned about “the high level of cash in many markets in the US, Europe,
Japan, and some developing countries that have contributed to the abnormal
rise in the values of assets”.
“This caused the Japanese stock market to grow by more than 50%
last year and American stock market to grow by 27%, in addition to the growth
of the European markets,” he said.
He told the news channel he believes the markets are
currently experiencing a sort of exaggerated optimism, he said, adding that the
circumstances which led to the rise in assets in 2013 was unlikely to happen
again, especially considering that interest rates are at zero in some countries.
The KIA, which manages the major oil producer’s wealth, has
stakes in companies including BP, Vodafone, and HSBC, according to Thomson Reuters data. It has also has a
$2.5 billion investment quota in China, the highest possible for a foreign
Western infrastructure has proved a popular investment over
the past few months. Norway’s sovereign wealth fund (SWF) has made purchases in
France and the UK, while Denmark’s PensionDanmark bought a 49% stake in six
wind farms based in Scotland and Wales in December 2013. The Danish fund has €1.1
billion in infrastructure assets, according to Preqin.
The Dutch and Danish were declared as leading the way among
institutional infrastructure investors according to Preqin data from November
2013, with Dutch pension giant PGGM having the largest allocation to
infrastructure assets at €4 billion.
Preqin’s survey found 66% of institutional investors are
targeting European investments in the next 12 months, compared with 24% seeking
similar investments in North America. Just 6% are targeting infrastructure
investments in Asia.
Danish pension giant ATP has €1.9 billion invested in
infrastructure assets and is targeting both North America and Europe next year,
while the German government agency DEG and German asset manager KGAL—both
prolific investors in infrastructure assets with almost €3 billion in
investments between them—stated they were only targeting European assets.
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