Business leaders from around the world gathered at Davos, Switzerland for the annual meeting of the World Economic Forum under the theme: “Improve the State of the World: Rethink, Redesign, Rebuild.” Bader M. Al-Saad was successful in implementing the “Rethink, Redesign, Rebuild” theme to the Kuwait Investment Authority during his six-year tenure as the Managing Director, and I applaud him for that. His efforts were recognized as the Institutional Investor listed him as one of the Top 5 Middle East Most Influential Financiers.
Pre- Al Saad, the sleepy bureaucratic KIA was run without any clear vision or objectives. Its investments where highly concentrated in U.S. Treasuries with only 2.5% in real estate and 1.5% in private equity funds. In late 2003, upon his appointment as managing director, Mr. Al-Saad commissioned a study comparing the fund’s investment practices with those of the Yale and Harvard endowments and hired Mercer Investment Consulting to review the KIA’s strategic asset allocation and draft a new investment program. Since then, the KIA has been increasing its exposure in emerging markets, decreasing its allocations to traditional asset classes, and increasing its allocation to non-traditional and uncorrelated asset classes. Today, about $32 billion or 15% of the fund is invested in emerging markets, buyout funds, and hedge funds.
“Returns in 2009 may prove one of the best for the Authority” Al-Saad said during an interview in Davos with Al-Arabiya TV. How good was 2009? Well, remember the public outcry against the $5 billion capital injection into Citigroup and Merrill Lynch? In December 2009, the KIA sold its stake in Citigroup for $4.1 billion and made a profit of $1.1 billion. As for its stake in Bank of America, Al Saad said that he still expects the KIA to make a profit on its investment, despite the 35% loss. Moreover, last May the KIA invested about $750 million in BlackRock Inc.’s capital increase, and to date it has achieved a 40% return on its investment. Going forward, the KIA will focus on investments in the financial, insurance, and services sector and targetcountries with growth rates between 8-10% mainly in Asia and Latin America.END
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