Maria Bartiromo Bones Up On Sovereign Wealth Funds

A few months ago Maria Bartiromo had never heard of Sovereign Wealth Funds. But rich, powerful men are right in her wheelhouse, and she has gotten up to speed.

Her due diligence is complete, although she is only a pawn in a battle over transparency issues that have been brewing for some time:

The large Middle East funds are run on commercial lines, and therefore any future US fund regulation should not treat them in the same way as Russian or Chinese funds, said Maria Bartiromo, the anchor of CNBC's global business news show Closing Bell.

"The Middle East funds want to allocate their dollars into the US, and there is already a meeting of the minds. Both sides want things to work, which is positive," said Bartiromo, talking to Gulf News about how the Gulf funds are in regular touch with US authorities. Gulf News

Middle-eastern SWF's are going on the offensive, and pushing back on claims that they need to become more transparent, claiming it would put them at a disadvantage to their private equity competitors:

Sultan bin Sulayem, head of Dubai World, said such moves by regulators were discriminatory and would deter him from investing. In an interview with the FT, the head of Dubai’s powerful government-backed conglomerate said Europe was now exerting more pressure on SWFs than the US, which has openly resisted Arab investment in assets deemed “strategic”. FT

Maria might have fallen hard for the sexy story line, but thinks the posturing will lead to a resolution:

“Unfortunately what is happening in the US is a taste of protectionism, under which regulators have decided to put funds from all countries together. Congress is set to put legislation in place which will seek to scrutinise everyone,” said Bartiromo.

However, after talking to many fund managers in the Gulf, Bartiromo was clear that in the end the two sides, the Middle East funds and the regulators, will find agreement based on transparency.

This is in contrast to the negative reaction she foresees from the Chinese and Russian funds to the US authorities, since “they do not want transparency, and will not react in the same way as the Middle East funds”, she said.

Of course, this might be good news for U.S. financial executives. The sharp drops in Blackstone and Och-Ziff would not likely be greeted to enthusiastically by Russians, but the middle easterners seem to be quite happy about losing money:

As an example of how the Gulf funds are commercially driven, she quoted Shaikh Hamad Bin Jasem Al Thani, Prime Minister and Foreign Minister of Qatar, and head of the Qatar Investment Authority, which has invested in major stocks like the Blackstone Group, Credit Suisse. These stocks have dropped sharply since their investment, but this has not dampened their enthusiasm for investing in financial services companies in the US.

Asked by Bartiromo if QIA would pull out of this situation, Shaikh Hamad said: “No, not at all. In fact, because we bought Blackstone at 30 and it is now at 13, we have actually bought more to average out the cost.”

Shaikh Hamad has quickly learned one of the oldest tricks in the book. When in trouble, double.

Double down, that is.

Still, the floodgates are open, and another deal has been announced.  Istithmar World Capital, the Dubai’s government-owned investment vehicle, is purchasing a majority stake in US-based corporate credit investor Gulf Stream Asset Management. The Dubai company seeks to expand beyond alternative investments and into credit markets.
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US ‘cannot ignore Mideast sovereign wealth funds’
Gulf News
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Gulf investor warns of EU over-regulation
FT
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Dubai’s private equity arm takes stake in US asset manager
Financial News
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Hat Tip

Inside Cable News 2.0
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