* Mumtalakat plans to diversify from private equity holdings
* Will tap credit markets after likely rating this year
By Natsuko Waki
DAVOS, Switzerland, Jan 28 Bahrain's sovereign
wealth fund, which invests mostly at home, plans to diversify
away from private equity projects and into stocks and bonds, its
CEO said on Thursday.
Talal Al Zain also told Reuters that Mumtalakat expects to
receive a credit rating this year, which would allow it to tap
capital markets for funding, including Islamic bonds.
Mumtalakat, which has assets of around $10 billion, has
investments in 35 companies. It holds stakes above 50 percent in
more than 15 of those firms.
"We want to diversify. We will be looking at investments
across markets. Our immediate focus will be to diversify
investments, channel funds more towards liquidity, that is fixed
income, equity markets," Zain said in an interview.
A $1 billion motor sports-themed commercial real estate
project in Bahrain was likely to be financed by a combination of
investment from strategic investors, private sector funding and
some of its own equity, he said.
But Mumtalakat would wait to receive its credit rating later
this year before issuing bonds.
"Getting a rating, which is to us to be transparent. As we
get a rating we will tap capital markets," he said.
Getting a credit rating has several implications. It
requires sovereign wealth funds (SWFs) to become more
transparent, given the level of disclosure they must offer to
receive a rating from international rating agencies.
It can also show that the business is independent from its
state owners. Western countries have criticised some SWFs for
making investment decisions based on political rather than
Mumtalakat, which publishes annual reports and discloses its
assets, is one of the most transparent SWFs in the Gulf.
"Some hostility from some Western European countries and the
United States towards SWFs in my mind came out because of the
lack of transparency," he said.
"In order for us to be a fair player in the market, we have
to be transparent. It helps us ease the process of achieving our
targets. We want to have the best corporate governance..."
Mumtalakat is facing an inquiry launched by Bahrain's
parliament this month into what it sees as mismanagement at the
fund. Zain has previously said he was relaxed about the probe.
Some members of parliament accuse Mumtalakat of injecting
money into portfolio companies such as Gulf Air and Bahrain
International Circuit without disclosing sufficient information.
Some MPs also accuse Mumtalakat of spending more on
consultancy services without informing a state tender board.
(Editing by Lin Noueihed)