The Gulf on a Spree
The Wall Street Journal dated September 21th has a page one story the cash the Gulf states are collecting due to high oil prices, and what they're doing with the cash. (Link: $ subscription)
Yesterday saw a burst of activity involving Mideast governments, including a battle between two Persian Gulf emirates over stakes in the London Stock Exchange and a bid by one of them for a stake in Nasdaq Stock Market Inc. A third emirate announced an investment in Carlyle Group, a Washington-based private-equity firm known for ties to political heavy hitters such as former President Bush.
Four of the eight largest government-controlled investment authorities are from the Gulf, and the Abu Dhabi Investment Authority tops the list with assets estimated at $875 billion, according to Morgan Stanley. That's more than triple the size of Calpers, the California pension fund.
Middle Eastern firms and funds shopping around the globe have spent $64 billion so far this year, compared with $30.8 billion in all of last year and $4.5 billion in 2004, according to Dealogic. Acquisitions in the U.S. and Britain account for slightly more than half of the total this year.
Dubai, which is seeking a minority stake in Nasdaq, asked the Bush administration to vet the deal upfront for potential national-security issues. It hired a team of Washington lobbyists and strategists to reach out to officials in the administration and Capitol Hill a day before the proposed deal became public, according to people familiar with the situation.
While President Bush promised a careful review of the deal, a key legislator, Democrat Barney Frank, said it "doesn't raise any alarm bells to me." Rep. Frank, who is chairman of the House Financial Services Committee, noted Nasdaq is a highly regulated entity and "there's no physical transfer of property" in the proposed deal.
The Nasdaq deal is part of a larger battle between Dubai and Qatar for control over parts of world stock exchanges. Dubai, part of the United Arab Emirates, is the flashier of the two. Nearby Qatar is a tiny country that controls the world's third-largest gas reserves.