Tags: Qatar | oil | wealth | fund

Qatar Oil Money Used to Buy Bank of America Stock

By John Morgan   |   Friday, 01 Nov 2013 12:53 PM

Qatar's sovereign wealth fund has amassed a stake worth around $1 billion in Bank of America, the United States’ second-biggest bank, in an investment that has fallen under the radar screen, the Financial Times reported.

The purchase has not been made public because it does not meet the U.S. regulatory threshold requiring that buyers disclose stakes of more than 5 percent in a company.
A $1 billion ownership piece amounts to less than 1 percent of BofA, which has a market cap of more than $150 billion, the Times noted.

A unit of Qatar Investment Authority, which invests some of the nation’s oil revenues, started to buy BofA stock about two years ago, and acquired more when shares fell to $7-$8 last year, according to Times sources. The stock is now trading above $14.

The Times sources said the QIA wants to increase its investments in the U.S. as the nation’s economic recovery continues, with a special focus on real estate.

Oil-rich Qatar participated in two capital injections into Barclays in 2007, and those stakes have been investigated by U.K. authorities following allegations of improper payments to Qatar, the newspaper reported.

The QIA has received more than $30 billion annually in recent years from the state, and has also used it to buy stakes in Credit Suisse, the Agricultural Bank of China and Santander Brasil.

Arab News said the QIA has piled up assets totaling between $100 billion and $200 billion, and is being “courted by bankers and politicians around the world.”

A senior executive at Credit Suisse, which sold a 6.2 percent stake to the QIA and is now one of the senior advisors to the fund, said more emphasis lately has been placed on making investments in emerging markets, Arab News reported.

Investment in American banks by oil-rich Middle East investors is not a new phenomenon. Saudi Arabia’s Kingdom Holding, the investment firm of billionaire Prince Alwaleed bin Talal, has held a well-publicized and profitable stake in Citigroup for years.

Al Bawaba, a Middle Eastern news site, said Gulf oil states and the region’s sovereign wealth funds are major investors in U.S. Treasurys, and are likely to feel the heat from any protracted decline in the dollar or U.S. government debt crises.

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