The article incorrectly said that the Kuwait Investment Authority is managed by the country's finance ministry. It is an independent, completely autonomous and legally separate entity.
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Foreign Wealth Funds Defend U.S. Investments
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Abu Dhabi's fund, in a letter sent to Treasury Secretary Henry M. Paulson Jr. last week, said it would not use its investments for political advantage. However, its promises fall short of promising the specific disclosures -- such as a list of investments -- that Treasury officials seek.
The six Arab states on the Persian Gulf, which together make roughly $1.5 billion a day from the sale of oil at roughly $100 a barrel, have been on a buying spree in the past year.
They bought stakes in some of corporate America's most famous brand names, including trendy retailer Barneys New York, District-based private-equity giant Carlyle Group, MGM Mirage and the Nasdaq Stock Market.
Leading the effort to make the voices of the sovereign wealth funds heard in this debate is the Kuwait Investment Authority. Founded in 1953, it is the world's oldest such fund, and was set up to save and build on government revenue to prepare for when the country's oil fields run dry. The returns in recent years have been spectacular -- 13.3 percent in 2007, 15.8 percent in 2006, and 11 percent in 2005.
Managed by the Kuwaiti Finance Ministry, the fund employs roughly 420 deal-makers, analysts and other workers, more than 80 percent of whom are Kuwaiti.
The fund's assets are 2.5 times the gross domestic product of Kuwait and, according to a report by Standard Chartered Bank, it is the fourth-largest fund in the world. Only those from Abu Dhabi, Norway and Singapore have more money.
Other than a stake in Chrysler purchased in the 1970s, the Kuwait Investment Authority had invested mostly within its own borders or in neighboring countries. For example, it held shares in a livestock development company in Syria, a real estate company in Yemen and a hospital in Egypt.
Then, in 2003, Saad came on board.
Saad, who had worked at Chase Manhattan and First National Bank of Chicago, wanted to shake things up. He remodeled the fund after the Harvard and Yale universities' endowments, two of the most successful investment funds of all time, and began looking toward overseas targets.
It wasn't until January, with the acquisitions on Wall Street, that the Kuwait Investment Authority became widely known around the world. "I'm sure we are now in the phone books of investment banks, as we are better known now," said Saad, 50.
Over the next few years, Saad said, "I would like to build a 'trophy portfolio' consisting of some of the most prestigious names" in business.
He said the next big purchases of assets in the United States may be in the real estate sector, which he expects will peak as an investment target -- in other words, hit rock bottom -- in the next few months. Saad said he also thinks U.S. telecommunications companies and more financial firms would make good investments.
