Qatar investment arm, CITIC plan $10 billion drive

Qatar's sovereign wealth fund has joined hands with Chinese investment conglomerate CITIC Group to set up a $10 billion fund that will scout for deals in China, even as the Gulf state's investment arm looks to further expand its presence in Asia, the Qatar Investment Authority revealed on Tuesday.

The QIA, with $170 billion in assets under management, and the State-owned CITIC Group will hold equal stakes of 50 percent in the fund, according to QIA officials.

Ahmad Al-Sayed, chief executive of the fund, said that the QIA is looking to invest $15 to $20 billion in Asia in the next five years. It also plans to expand its offices in Beijing and New Delhi and will open a new office in New York.

He shrugged off concerns of a slowdown in China and said that the QIA, as a long-term investor, will continue to look for attractive assets in the country and to form new partnerships to create long-term value.

"Sometimes the slowing gives you a better valuation. And as a long-term investor, we look for companies with good fundamentals that offer long-term and sustainable returns," he said.

The fund will in particular focus on sectors like healthcare, infrastructure, real estate, consumer services, energy, as well as technology, media and telecommunications in China, according to Al-Sayed.

"We see real long-term investment potential in companies here in China because of the increasing availability of interesting sustainable investment opportunities as the economy develops and diversifies, the growing brand and stature of large Chinese corporates ... and the continuing emergence of an affluent and increasingly discerning middle class," he said.

Meanwhile, Al-Sayed said Qatar is also willing to cooperate with the newly established Asian Infrastructure Investment Bank to provide funds for projects within the region.

"The bank will play a big role in the future. Being a founding member is a signal that we would like to cooperate with the bank to invest," he said.

The QIA recently purchased stakes in Lifestyle International Holdings, owner of Hong Kong's SOGO department stores. The deal was seen as part of the fund's plan to diversify its retail investment portfolio, which already includes stakes in British department store Harrods and the French store Printemps.

In the Chinese mainland, one of the QIA's high-profile deals is the $2.8 billion investment in Agricultural Bank of China's initial public offering in 2010. The fund also holds stakes in CITIC Group and Chinese e-commerce group Alibaba Group Holding Ltd.

Since the breakout of the financial crisis in 2008, the fund has shifted its strategy to active direct investment from indirect investment through third parties, according to Al-Sayed.

The Qatari fund has widespread business interests including stakes in financial institutions such as Barclays and Credit Suisse, property projects including London's Canary Wharf Group as well as French soccer club Paris-Saint Germain.

Al-Sayed said that increasing the fund's presence in Asia does not mean it is turning away from mature markets such as Europe and the US and it will continue to invest in deals in developed economies.