Qatar owns Harrods, Paris Saint-Germain football club and a 19% stake in Rosneft, a Russian energy giant
, few people in Silicon Valley had heard of Uber or the Public Investment Fund . The former had not provided its first ride. The latter, a Saudi sovereign-wealth fund, was a small entity with investments in local industry. But when the ride-sharing firm went public in May thewas among its five largest shareholders. It had bought a 5% stake in 2016 when Uber was valued at $49 per share. It started trading at $42. On paper, Saudi Arabia took a $200m loss.
Gulf economies need to modernise and diversify away from oil and gas. Saudi Arabia, especially, needs to create good jobs for its swelling number of underemployed citizens. Sovereign-wealth funds can help. Some were originally set up to do little more than smooth the flow of revenue arising from bumps in commodity prices. Now, they are being given more ambitious goals. The princes who call the shots in the Gulf want to make their countries’ savings work much harder.
Qatar, by contrast, seems to use its fund as an adjunct to diplomacy. It has a tiny population and the world’s third-largest gas reserves, so its rulers worry little about short-term investment returns. “We don’t have unemployment. All Qataris can find a job,” says Ahmed al-Sayyed, a former director of the Qatar Investment Authority , which holds $1m in assets for each of the emirate’s 300,000 citizens.owns a large chunk of London, including the Harrods department store.
Other Gulf states are making similar attempts at state-directed capitalism. Abu Dhabi’s Mubadala has made big investments in renewable energy, building solar and wind farms across the country. A $200m subsidiary of Oman’s main sovereign-wealth fund wants to bring high-tech firms to the sultanate. “The agenda is to develop the local ecosystem, not just to have capital flow to Britain or America,” says Ali Qaiser, an Omani venture capitalist.
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