Fund keeps analysts guessing
$1trn assets under management
Kuwait Investment Authority (KIA) is not only the oldest Gulf sovereign wealth fund, but also the most opaque.
It publishes little information about its assets and usually invests abroad through asset managers rather than directly.
Its low-profile approach contrasts with the likes of Saudi Arabia’s Public Investment Fund (PIF), Abu Dhabi’s Mubadala and the Qatar Investment Authority (QIA) which announced themselves on the global stage through multi-billion-dollar purchases of trophy assets.
“The KIA has yet to do the kind of co-investments or the investing abroad in sectors that the government is trying to develop at home, which the QIA, the Abu Dhabi sovereign funds and now very explicitly the PIF is doing,” says Rachel Ziemba, founder of Ziemba Insights, a New York-based advisory firm.
She spoke to AGBI before an announcement this week that the KIA would join the BlackRock-led AI Infrastructure Partnership (AIP), which launched last September to invest up to $100 billion including debt and equity in developing artificial intelligence technologies. KIA owns 5.2 percent of BlackRock.
KIA traces its origins back to 1953 and lays claim to being the world’s oldest sovereign wealth fund. Its General Reserves Fund (GRF) receives most of Kuwait’s oil profits as well as the income from its own investments.
The GRF pays the state budget and holds the KIA’s domestic and Middle East and North Africa-based assets. A second investment vehicle, the Future Generations Fund, invests solely abroad.
Kuwait GDP growth
The Sovereign Wealth Fund Institute estimates the KIA has $1.03 trillion of assets under management, making it the fifth largest globally.
The fund owns 5.6 percent of Germany’s Mercedes-Benz Group and 5.4 percent of BlackRock. It is a shareholder in more than 90 companies, S&P Global data shows, although the size and value of most of these investments is unspecified.
In terms of geography, 55 percent of these companies are in the Middle East and Africa, 21 percent in Asia-Pacific, 13 percent in North America and 12 percent in Europe.
Domestically, the KIA is a shareholder in Kuwait Airways, Kuwait Projects Co, telecom operator Zain, most Kuwait banks and several other conglomerates.
KIA managing director Sheikh Saoud Salem Al-Sabah last month advised against overlooking the United States as an investment destination, according to reports. “Underweight America at your own risk,” the executive said at an event in Qatar.
Kuwait oil breakeven prices
Ziemba says Al-Sabah was highlighting a challenge many big investors have globally, which is where to put large amounts of capital.
“He made the case that in that context it’s hard to bet against the US, because where else has such a deep liquid capital market as well as tech innovation and the like?” said Ziemba.
The KIA provides no information on its website about its investments, although prior to parliament’s suspension in May 2024 executives would be questioned periodically by lawmakers. That kind of scrutiny was unique in the Gulf, Ziemba says.
Parliament and the government were often at loggerheads, slowing efforts to invigorate the country’s non-oil sector, so the emir’s suspension of parliament has boosted confidence that Kuwait will finally implement its economic diversification and infrastructure development plans.
This year, the KIA sold nearly 50 million shares in oil major BP, reducing its stake to just 0.06 percent, according to S&P, which marks its near-complete exit from the British company.
In the late 1980s, the KIA owned nearly 22 percent of BP before the UK government ordered it to lower its stake.
“KIA selling more of its BP shares could be based on financial returns and the company’s financial prospects and other things within that dynamic,” adds Ziemba. “In selling energy sector equities, KIA was probably following what the market was doing.”
