Kuwait’s sovereign wealth fund, the world’s oldest and one of the largest, has played a key role in preparing OPEC’s fourth-largest producer for a post-oil future and helping prop up the economy as it was battered by the pandemic. The $769 billion Kuwait Investment Authority is also a leading global investor, with holdings in BlackRock Inc. and Mercedes-Benz Group AG. In a rare move, it ousted the head of its London arm in July, sending shock waves through the normally sedate and secretive world of Gulf sovereign funds.
1. Why was the fund set up?
The Kuwait Investment Board was established in London in 1953, eight years before the nation gained independence, to invest surplus oil revenue and help diversify the economy. The board was later replaced by the Kuwait Investment Office, and in 1982 the KIA was set up as its parent entity. The KIA controls Kuwait’s General Reserve Fund, which is the main repository of oil revenues and pays out budget expenditures. In addition, it manages the Future Generations Fund, which is meant to safeguard the nation’s wealth for a time after its oil runs out and whose assets have grown to more than $700 billion. The KIA is overseen by a board that includes the finance and oil ministers.
The Kuwait Investment Board was established in London in 1953, eight years before the nation gained independence, to invest surplus oil revenue and help diversify the economy. The board was later replaced by the Kuwait Investment Office, and in 1982 the KIA was set up as its parent entity. The KIA controls Kuwait’s General Reserve Fund, which is the main repository of oil revenues and pays out budget expenditures. In addition, it manages the Future Generations Fund, which is meant to safeguard the nation’s wealth for a time after its oil runs out and whose assets have grown to more than $700 billion. The KIA is overseen by a board that includes the finance and oil ministers.
2. What does it invest in?
The KIA is the second-biggest sovereign wealth fund in the Gulf region, with a significant proportion of its investments in the US. During the 2008 crisis, it bought into banks including Citigroup Inc. KIO, its London arm, has been a prolific investor in the past year and participated in the US listing of private equity firm TPG Inc. Unlike parent KIA, the KIO mainly invests directly, predominantly in public equities and fixed income. The KIA owns stakes in ports, airports and power distribution systems globally, as well as in regional firms including Mobile Telecommunications Co., National Hotels, and Kuwait Telecommunications Co. KIA Managing Director Ghanem Al-Ghenaiman has said the fund is on the lookout for opportunities in real estate, energy and IT.
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