QIA learns from its mistakes
By Sarah Young
Sitting on about £700m worth of profits from its eight month-long investment in UK bank Barclays, the Qatari foray into European M&A is looking a lot more successful today than it was this time last year.
The Qatari investment in Barclays was jointly made by the Qatar Investment Authority, Qatar’s sovereign wealth fund, and Challenger, a vehicle owned by the Emirate’s royal family.
It was QIA that was looking somewhat out of its depth 12 months ago. Having shelved a takeover bid for supermarket giant J Sainsbury at the last minute in late 2007, in July last year it emerged that Four Seasons, the UK nursing homes operator QIA bought through the Three Delta fund in 2006, was in trouble.
The high-profile collapse of the bid for J Sainsbury led to questions about QIA’s deal-making experience and this was only compounded by the failure of the highly leveraged buyout of Four Seasons, which subsequently saw QIA’s £110m equity investment wiped out.
But a bit further along the road and QIA is sitting pretty on private equity-like returns from its bet on Barclays.
It seems that the sovereign fund is moving away from its attempts to control companies and is focusing instead on buying stakes in stalwarts of the European corporate world.
As well as its stake in Credit Suisse, hiked to 8.9% after the Swiss bank’s capital raising in October 2008, QIA is currently in exclusive talks with Porsche that could lead to an investment in the sports-car maker and possibly the acquisition of the derivatives package controlling VW shares.
Two years ago when companies such as Four Seasons and J Sainsbury were in play, QIA had to compete hard to put its money to work. It made some mistakes trying to find its feet.
In the post-credit crunch world, QIA’s liquidity is regarded as a valuable commodity and as such the investment landscape is infinitely more amenable to a sovereign wealth fund looking for opportunities. It can make choices rather than trying to win auctions.
An investment in Porsche in its hour of need could prove to be just as successful for QIA as the Barclays deal.