Qatar taking a risky path with its foreign investment plans - The Globe and Mail

Qatar risks a foreign investment pile-up. The tiny gas-rich state might have up to $100-billion (U.S.) to snap up overseas assets, based on guesses at the size of the country’s main sovereign wealth fund. Qatar’s mooted interest in a 7.5-per-cent stake in European aerospace and defence company EADS would only cost it less than $2-billion at current market prices. But it’s unclear if the country’s overseas spending is as focused as its domestic ambitions. And its taste for large high-profile assets could be dangerous.

The soon-to-be richest country in the world – on a GDP per capita basis – is able to splash its cash overseas, given the stability of its domestic politics. The Qatar Investment Authority holds an estimated $60- to $100-billion in assets. On top of that, the country reckons its foreign reserves for the year will total around $20-billion. But that pales in size in absolute terms against the sovereign funds of Abu Dhabi and China, which are each several times bigger.

Assuming estimates of the QIA’s size are about right, at least 20 per cent of Qatar’s assets are spread across a handful of purchases made over the last two years alone. Qatar has spent more than $20-billion on stakes in German car makers Porsche and Volkswagen – which have just run into trouble – Agricultural Bank of China, Santander Brasil, Spain’s Iberdrola and construction firm Hochtief. It has also thrown a lifeline to some Greek banks and snapped up Britain’s luxury department store Harrods, not to mention two European football teams.

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