The stealthy rise of the sovereign wealth fund

Wall Street might be forgiven for thinking that this whole Middle East, sovereign wealth fund business has rather crept up on them. One minute American financial institutions reign supreme. The next they’re flogging off stakes at eye-watering prices to little-known investors.

But wait! Citigroup on Monday night hailed the Abu Dhabi Investment Authority as “one of the world’s leading and most sophisticated equity investors.”

Let’s look at the evidence. In 2006, the ADIA merited a mention in how many stories in the pages of the business and financial press?

Wall Street Journal - 0
New York Times - 0
Financial Times - 6

So this leading light of the world’s equity investors was operating very much on the hush-hush last year. As a point of comparison, Warren Buffett got 184 mentions in the WSJ in the same period; Citigroup themselves got a massive 1,480.

But then outgoing investment from the Middle East into the world’s financial heavyweights has really been a story of 2007. So how has ADIA fared so far this year?

Wall Street Journal - 10
New York Times - 2
Financial Times - 30

Still not exactly saturation coverage, so confusion may yet reign. After all, Fox Business’ travails with the geography of the Middle East have been well, and humorously, chewed over. Then there was that Cutter Associates business that rather threw some observers earlier this month.

We sense a gap to be filled here. And we’re getting right onto it.

In the meantime - here’s a brief reminder of where and how the Middle East has been making financial waves in 2007.

• April - Saudi billionaire buys 3.1 per cent stake in HSBC
• May - Dubai International Capital makes substantial investment in HSBC with a holding that did not surpass the 3 per cent level
• May - DIFC revealed to have built a 2.2 per cent stake in Deutsche Bank
• July - Apollo Management sells a stake of less than 10 per cent to the Abu Dhabi Investment Authority
• September - Carlyle Group sells a 7.5 per cent stake to Mubadala Development Company, owned by the Abu Dhabi government
• September - Rivals Qatar and Borse Dubai take 48 per cent of the LSE between them, while also competing for influence in OMX, the Stockholm-based group
• October - Och-Ziff sells a 9.9 per cent stake to Dubai International Capital
• November - Colony Capital reported to be considering the sale of a stake to a Middle Eastern SWF