The Wall Street Journal-20080116-Istithmar Weighs China Investment
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Istithmar Weighs China Investment
ABU DHABI, United Arab Emirates -- Istithmar, an investment firm controlled by the Dubai government, is considering investments in China, its chief executive said.
This comes as Middle Eastern sovereign and private investment companies, bolstered by record oil revenue, seek to diversify away from Western markets in favor of Asia, where growth remains robust and the welcome may be warmer.
"Everyone is aware of the backlash DP World faced in the U.S., and as a result sovereign wealth funds are looking toward nondeveloped markets to avoid such a backlash," Istithmar CEO David Jackson said. "Countries such as China where we recently opened an office are very welcoming to sovereign wealth funds, so more are looking to invest there."
In 2006, when Dubai-controlled company DP World bought U.K.-based Peninsular & Oriental Steam Navigation Co. for $6.8 billion, it acquired five U.S. ports. It won U.S. federal approval to manage them, but a firestorm of controversy followed, leading lawmakers to overhaul the review process for foreign investments in the U.S. and forcing DP World to sell the ports.
Istithmar owns U.S. retailer Barneys, several U.S. and U.K. properties and a 2.7% stake in U.K.-based, Asia-focused bank Standard Chartered PLC. "There is a lack of trust in sovereign wealth funds and better initiatives are needed to curb such suspicions," Mr. Jackson said. "Countries such as the U.S., the U.K. and Germany are very reluctant to allow sovereign wealth funds in."
Asian and Middle Eastern sovereign funds have made headlines in recent months by acquiring stakes in major financial firms such as Merrill Lynch & Co. and Citigroup Inc. of the U.S. and Switzerland's UBS AG, which has extensive U.S. operations.
Merrill and Citigroup have received billions in cash infusions from the funds and are in talks to get even more capital from outside investors -- raising eyebrows in Washington, where lawmakers have more closely scrutinized foreign investments in recent years.
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Shaji Mathew in Dubai contributed to this article.
