CORRECTED – Mideast sovereign funds seek reciprocal investment
By Paritosh Bansal
NEW YORK, Sept 8 (Reuters) – Sovereign wealth funds in the Middle East are increasingly looking for reciprocal investments from companies they do business with, as they try to develop their local economies, lawyers who work with these funds said.
The practice has picked up steam recently in Gulf Arab states, as local economies present more attractive investment avenues, the West is crippled by the credit crisis and these funds have more leverage as some of the few remaining sources of fresh capital, one expert said.
“In terms of investing, there is like a quid pro quo,” said Paul Homsy, chief executive of Crescent Asset Management, which works with sovereign wealth funds in the Middle East. “They want to see these institutions get engaged. ‘We are going to invest in you, but you come out here and participate.’”
In one such recent deal, Abu Dhabi investment agency Mubadala Development Co entered into an $8 billion joint venture with General Electric Co (GE.N: Quote, Profile, Research, Stock Buzz) that initially will focus on providing commercial finance in the Middle East and Africa.
The companies plan to invest about $40 billion in commercial and infrastructure projects in the region over the next 18 months. They also plan to set up a clean energy technology center in Masdar City, a new city in Abu Dhabi that aims to be carbon neutral.