Gulf Arab funds loosen purse strings

AP ^ | Tuesday September 1, 2009, 12:12 pm EDT | Adam Schreck,

[BenLurkin]

Gulf nations again on the prowl for Western investments

DUBAI, United Arab Emirates (AP) -- Government-backed investors bankrolled by Persian Gulf oil wealth are back on the prowl for deals in the West after mostly sitting out the past year's turbulence.

It is difficult to say whether the often secretive investment vehicles believe the market has bottomed out. What is clear: the funds are regaining their dealmaking appetite and are willing to bet big despite the uncertainties still coursing through the global economy.

A series of high-profile deals struck in the span of a few months show that even as they weathered big hits to their portfolios, the region's investment vehicles still have plenty of money, and aren't afraid to use it.

"They're able to step in and take opportunities that other people may not be able to take," said Benjamin Newland, a partner at King & Spalding law firm in Dubai who has been involved in deals for a number of Gulf investors. "They're filling a funding gap ... left by the credit crisis."

For bankers and policymakers from Washington to Berlin who are actively courting the funds, the acquisitions are a vote of confidence, even if they risk re-igniting fears that the deals might be politically motivated.

Since the start of spring:

-- Qatar's sovereign wealth fund agreed to spend 7 billion euros, or about $10 billion, to become the third-largest shareholder in Volkswagen AG, Europe's largest carmaker.

-- An investment company backed by the United Arab Emirates sheikdom of Abu Dhabi paid about $2.6 billion for a 9.1 percent stake in Mercedes-Benz parent Daimler AG, making it that automaker's biggest shareholder, just ahead of Kuwait's sovereign wealth fund.