Qatar sovereign fund moves stakes to govt

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India to run extra Eid flights to Qatar due to embargo

DOHA, June 22, (Agencies): Qatar’s sovereign wealth fund has transferred over $30 billion worth of its domestic equity holdings to the finance ministry and may sell other assets as part of a restructuring drive, people familiar with the matter told Reuters. Stakes in 18 companies were transferred earlier this year, before Qatar’s diplomatic rift with other Gulf states.

The stakes include major holdings in some of the country’s top firms such as Qatar National Bank, telecommunications operator Ooredoo and Qatar Electricity & Water Co. The Qatar Investment Authority, one of the world’s largest sovereign funds, moved the holdings as part of efforts by the entire government to become more efficient and generate higher returns, the sources said. “The assets were transferred so that the Ministry of Finance could oversee these holdings in a more active manner,” one of the sources said. He added, “Under the rule of Sheikh Tamim, Qatar is moving into an era of greater government scrutiny and oversight of funds. The finance ministry has a hands-on approach to public investments.”

A second source said an internal restructuring of the QIA had started earlier this year, aiming to ensure the fund focused on its strengths, particularly international investing. The QIA declined to comment, while the finance ministry did not respond to requests for comment. The QIA, which rarely discusses its operations publicly, is believed to have over $300 billion of assets around the world. The holdings transferred to the finance ministry include stakes across the country’s banking industry: Islamic lender Masraf al Rayan, Ahli Bank, Qatar Islamic Bank, Qatar International Islamic Bank, Doha Bank, Commercial Bank of Qatar and Al Khalij Commercial Bank.

They also include industrial, trading and transport firms: Qatar National Cement, Al Meera Consumer Goods , Qatar Gas Transport, Gulf International Services, Mannai Corp, Mayaza Qatar Real Estate, Qatar Industrial Manufacturing Co and Qatar Oman Investment Co. The sources did not specify exactly how holdings in these companies would be managed more actively. They bring to the finance ministry annual dividend revenue estimated at over 3 billion riyals ($824 million) this year. “It has not been decided yet how the revenue from the company dividends will be used. They could form an additional revenue stream for the government, or the finance ministry holdings could be prepared for privatisations or strategic sales,” the first source said.

The restructuring of the QIA was decided months before Saudi Arabia, the United Arab Emirates and Bahrain cut diplomatic and transport ties with Doha this month, accusing it of backing terrorism — a charge which Doha strongly denies. The changes at the QIA are part of a country-wide consolidation drive which includes planned mergers of state-owned liquefied natural gas producers Qatargas and RasGas, and Qatar Petrochemical Co with Qatar Vinyl Co. The second source said assets which the QIA might sell included Hassad Food, the country’s top investor in the international food and agri-business sectors. It was established in 2008 as a wholly owned subsidiary of the QIA. No decision has been made, the source stressed.

Meanwhile, India has asked two domestic carriers to run extra flights to Doha ahead of the Eid holiday to help citizens stranded there following an embargo imposed on Qatar Airways. Tens of thousands of Indian migrants travel home from Doha for the religious holiday every year, but many have been struggling to book tickets since three Gulf states barred Qatar’s national carrier from using their airspace earlier this month. India’s civil aviation minister Ashok Gajapathi Raju said the government had asked state-owned Air India and commercial carrier Jet Airways to run extra flights to and from Doha between June 22 and July 8. “We’ll operate additional flights … for our citizens not able to get tickets at Doha,” Raju wrote on Twitter, adding he was liaising with India’s foreign minister Sushma Swaraj. “All steps necessary for timely movement of our citizens from Doha will be ensured.” A senior Indian foreign ministry official told AFP that extra commercial flights were being run to “facilitate movement of those who wish to travel to India but cannot do that via Qatar’s neighbouring countries”.

Furthermore, executives working on a three-way bank merger in Qatar to create the country’s second largest lender expect to finish valuing the deal in the coming weeks and aim to complete it by the end of the year, sources familiar with the matter said. Shareholders at Masraf Al Rayan, Barwa Bank and International Bank of Qatar were committed to pushing ahead with the deal despite the current embargo by some of Qatar’s Arab neighbours, the sources said. “There is no hesitation. If anything, the situation [the GCC dispute] makes the need for banking sector consolidation more acute,” said one of the sources. None of the banks were available to comment.

A shake-up has long been mooted in the Qatari banking sector given that 18 local and international commercial banks serve a population of 2.6 million. The argument for consolidation has become more compelling now that lower oil and gas prices has trimmed state spending, curtailing deposit growth and revenue generation. The more than two-week travel and diplomatic boycott by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt could further dent bank performance if the dispute drags on, say analysts.

Masraf Al Rayan, which is the acquiring bank, was holding discussions with the other two lenders to finalise the valuation of the deal, the sources said. Other matters will be agreed by the board of the newly-merged bank including the potential impact on the three banks’ existing branch network and staffing, said the soources.

In December, Reuters reported that the trio had begun merger talks which, if successful, would create the Gulf state’s second-largest bank. The new bank, which would be run in compliance with Islamic banking principles, would have assets worth around 160 billion riyals ($43.6 billion). KPMG is advising Masraf Al Rayan on the merger, the sources said, with Perella Weinberg advising IBQ, the sources said. Credit Suisse was advising Barwa, they added.

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