The Middle East's 10 Biggest Sovereign

Wealth Funds (For Now)

Dominic DudleyContributor
I write about business and politics in the Middle East and beyond

Saudi Arabia’s plan to create a $2 trillion sovereign wealth fund has set an ambitious new
standard for state-run investment vehicles. These funds are an increasingly common sight around
the world, but particularly in the Middle East, where oil-rich governments like to squirrel away
money when oil prices are high in preparation for leaner times. The Sovereign Wealth Fund
Institute (SWF Institute) lists 79 funds in its rankings, with 20 of them in the Middle East and
North Africa.
Now that the price of a barrel of oil has slumped, these stores of wealth are coming into play,
helping governments to deal with their budget deficits so they can still provide all the services
their citizens have come to expect. But which ones have the most money?

Here is the top 10 in reverse order, based on figures from the funds (where available) and
estimates by the SWF Institute and Moody’s.

Downtown Tehran on April 27, 2016. (Photo: ATTA KENARE/AFP/Getty Images)

10. National Development Fund of Iran : $62bn

Even as international sanctions were hammering Iran’s economy, the government managed to
build up its sovereign wealth fund. The NDFI was set up in 2011, taking over from the Oil
Stabilisation Fund which had been drained of resources by the authorities.

In its most recent statement on the matter, NDFI chairman Seyed Hosseini said in June 2014 that
it had assets under management of more than $62bn. The figure is likely to be greater now,
though it’s not clear by how much. The fund’s money comes from the country’s oil revenues. In
the fiscal year ending March 2016, the Tehran government handed 20% of its oil revenues to the
fund, according to the IMF. That is due to rise to a third of oil revenues from this year.

If Iran manages to increase its oil output to the extent that it hopes in the years ahead, and if oil
prices start to inch upwards as many analysts expect, then the fund ought to grow at a healthy
pace. The NDFI invests both domestically and overseas and will be under pressure to help out
with the huge amount of investment needed to rebuild the local economy in the post-sanctions
era.

A Mubadala employee walks past the company's logo. (Photo: Jonathan

Drake/Bloomberg News)

9. Mubadala Development Company (Abu Dhabi) : $67 billion

One of Abu Dhabi’s smaller investment funds, Mubadala plays a key part in the government’s
efforts to diversify its economy. Its investments and joint ventures are designed to bring
international companies into the emirate, building up local skills and creating jobs.

It focuses on four main areas: technology and industry; aerospace and engineering; energy; and
emerging sectors such as healthcare, real estate and infrastructure. It has joint ventures and
investments with the likes of commodities trader Trafigura and technology giant IBM and runs a
$10bn global investment fund with China Development Bank Capital. It also owns the local
renewable energy specialist Masdar.

At the end of 2015, Mubadala reported that it had total assets of AED246bn ($67bn).
An attendant fills a customer's vehicle at a Cosmo Oil Co. gas station in Tokyo, Japan.
The company is part-owned by Abu Dhabi investment fund IPIC (Photo: Pierre-
Olivie/Bloomberg News)

8. International Petroleum Investment Company (Abu Dhabi) : $68bn

As the name suggests, this fund was set up to invest in oil and gas companies around the world.
Its portfolio includes stakes in Austrian petrochemicals firm Borealis, Japanese oil refiner Cosmo
Oil and electricity provider Energias de Portugal.

In its most recent financial statement, covering the period to June 2015, it reported total assets of
$68bn.

7. Abu Dhabi Investment Council : $90bn-110 billion

The second tier of Abu Dhabi’s investment funds is led by ADIC, which was set up in 2007. It
invests in what the government describes as “an expansive portfolio of highly diversified asset
classes”.

Part of the rationale behind the fund is to help diversify the emirate’s economy and help local
companies gain an international footprint.

ADIC’s investments include stakes in local lenders National Bank of Abu Dhabi and Abu Dhabi
Commercial Bank, as well as Abu Dhabi Aviation Company, which specialises in serving the
local oil industry, and Abu Dhabi Investment Company.

It is estimated to have assets worth $90bn-110bn.

Saudi Deputy Crown Prince Mohammed bin Salman, who has set out a plan to
transform the PIF nto a $2 trillion fund (Photo: FAYEZ NURELDINE/AFP/Getty Images)

6. Public Investment Fund (Saudi Arabia) : $160 billion

The PIF is the vehicle that the Saudi government is plans to use to hold its shares in local oil
giant Saudi Aramco. If and when that process is completed it will boost the fund’s holdings to an
estimated $2 trillion, making it easily the largest investment fund in the world.

Prince Mohammed bin Salman, deputy crown prince of Saudi Arabia, told Al Arabiya
television on April 25 that “The fund will take control over more than 10% of the investment
capacity of the globe. The fund will own more than 3% of the assets on earth.”

For now the fund is rather smaller and is thought to control a portfolio worth $160bn, which
mostly consists of investments in the domestic economy.

A Boeing 737 operated by Fly Dubai, which is part-owned by the Investment

Corporation of Dubai. (Photo: Jasper Juinen/Bloomberg)
5. Investment Corporation of Dubai : $183bn

Dubai has never had much oil, unlike its fellow emirate Abu Dhabi. That has forced it to
diversify into other areas to build up its economy, such as financial services, real estate, tourism
and trade.

ICD acts as the main investment arm of the Dubai government and has interests in many of these
sectors, including holdings in the Emirates and FlyDubai airlines, local property developer
Emaar and Emirates NBD bank.

In its most recent set of financial results, it reported assets of AED672bn ($183bn) as of
December 2014.

4. Qatar Investment Authority : $256bn-304bn

Qatar makes most of its money from sales of natural gas, a commodity which tends to have a
more stable price environment than the volatile oil market. That puts the Doha government is a
stronger position to ride out the current economic downturn than many of its neighbours, but the
QIA may well have suffered some large losses in recent years. In September, the Financial
Times suggested the fund could have lost $12bn as a result of the downturn in the fortunes of
some of its shareholdings, like Volkswagen, Glencore and the Agricultural Bank of China. It has
also previously invested in German car maker Porsche and UK bank Barclays.

That will have dented its portfolio, but not caused any undue panic. Overall, it is estimated to
have assets worth $256bn-304bn.

3. Kuwait Investment Authority : $548bn-$592bn

The KIA has a longer history than any other fund in the region, tracing its roots back to the
Kuwait Investment Board, which was set up in 1953, eight years before the country even gained
its independence. The KIA itself was formed in 1982.

As well as being one of the largest funds in the world, it is also one of the more secretive, rarely
giving details of specific investments. Some are known however. It’s holdings include the state’s
shares in Kuwait Petroleum Company and it has also been a long-term shareholder in German
car firm Daimler.

It usually prefers to take a back seat in its investments, avoiding majority or controlling interests
in most of the companies it invests in. It runs two funds: the general reserve fund and the future
generations fund. By law, at least 10% of the all state revenues are transferred to the future
generations fund every year.

It is estimated to have assets worth $548bn-$592bn.

2. SAMA foreign holdings (Saudi Arabia) : $612bn

The foreign holdings of the Saudi Arabian Monetary Agency, the country’s central bank, form
one of the largest pools of savings of any country in the world. The bank is a cautious investor
and most of its portfolio is thought to be held in low-yielding US bonds.

The Saudi government has been drawing down some of its savings to cover huge budget deficits
in recent years however, which has dented the value of SAMA’s holdings. The central bank
reported SR2.3 trillion ($612bn) in foreign assets at the end of 2015, down from SR2.7 trillion at
the end of 2014.

The headquarters of the Abu Dhabi Investment Authority rises above other buildings in
Abu Dhabi. (Photo: Charles Crowell/Bloomberg News)

1. Abu Dhabi Investment Authority : $589bn-$773bn

ADIA is the largest of the current crop of Middle East sovereign wealth funds. From a shiny
skyscraper on the Abu Dhabi corniche, the investment fund's managers looks after a portfolio
with a value estimated at between $589bn and $773bn. Set up in March 1976, it invests across a
wide range of asset classes, including quoted equities, fixed income, real estate, private equity
and infrastructure.

ADIA doesn’t give too much information away about the size of its fund or any specific
investments, but in its most recent annual report, released in June 2015, it said it had made an
annualised rate of return of 8.4% over the past 30 years.

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