Many businesses in the West are currently cheap buying targets for national investment trusts from the Middle East and Asia. This shopping spree is one more consequence of the crisis on financial markets. State-owned investment trusts from oil exporting countries as well as Asia invested more than 43 billion Euros in European and US corporations in 2007 alone. And over the first half of this year the sum invested in corporations from the West already amounts to 21.6 billion Euros.
The above figures are the findings of a recent survey by the
Centre for Research on the European Economy (ZEW) and the Bureau van Dijk Electronic Publishing.
One of the heavyweights among investors is the Government of Singapore Investment Corporation which over the past months has bought holdings of almost 7 billion Euros in the Swiss UBS bank and 4.7 billion in the US bank Citigroup. Giant investments were also carried out by the Kuwait Investment Authority which invested 4.4 billion Euros in Merrill Lynch and 566 million in Visa which is a financial service provider.
Stock exchanges in Europe and the USA are purchase targets as well. Thus, the Qatar Investment Authority has a 20% holding of the London Stock Exchange (LSE) and a 10% share in the Scandinavian OMX stock exchange. The Dubai International Financial Centre recently bought a 28% share in the Nasdaq Stock Market at the LSE.
Not only do state-owned or state-controlled investment trusts from the Middle East and Asia invest in financial businesses, but also in industrial enterprises. The Arabian Saudi Basic Industries government trust, for instance, recently took over control of the US manufacturer of plastics, GE Plastics. These trusts also invest in luxury brands such as Aston Martin or Bulgari. And even hotel chains such as InterContinental are nowadays financed by trusts from the Middle East and Asia.
A comprehensive analysis of this topic is contained in the October edition of the “M&A-Report” by the ZEW which can be downloaded free of charge from the internet. 