Sheikh Who Backed Barclays Gets Another Shot With Qatar’s Money

(Bloomberg) -- On a March morning in Qatar’s Ras Laffan Industrial City on the Persian Gulf, a red flame shrouded in black smoke shoots into the haze from a 650-foot stack. The burst of fire is burning off excess fuel as workers rush to finish equipment that will help the nation, already the world’s biggest exporter of liquefied natural gas, more than double output in the next two years.

An hour away in Doha, amid the glass and steel skyscrapers turning this desert capital into a modern metropolis, Sheikh Hamad bin Jassim bin Jaber Al-Thani will invest as much as $20 billion a year from the gas bonanza.

Sheikh Hamad, Qatar’s prime minister and foreign minister, wears a third hat: chief executive officer of the Qatar Investment Authority, which was founded in 2005. A latecomer among nations with sovereign wealth funds, Qatar formed the QIA to preserve its oil and gas wealth.

Last year, the Connecticut-sized emirate -- best known as a staging ground for the 2003 U.S.-led invasion of Iraq -- earned more from LNG than oil for the first time. That milestone followed a 15-year, $120 billion spending binge by the country on its gas, petrochemical and other industries. Gross domestic product has surged to $101 billion, or $101,000 for each of the 1 million men, women and children on the thumb-shaped peninsula -- among the highest per-capita GDPs in the world.

“Qatar is on the verge of being transformed,” says Thierry Bros, a gas companies analyst at Paris-based Societe Generale SA. “It’s a small amount of people with a tremendous amount of wealth.”

Barclays Rebound

Now, as Ras Laffan’s 140,000 workers race to multiply Qatar’s riches, Hamad is navigating investments overseas and at home. He bet QIA money on international banks just as the credit crisis forced many to take government handouts.

On Oct. 31, he raised the QIA’s 6.4 percent stake in Barclays Plc to as much as 12.7 percent, propping up the U.K.’s third-biggest bank after it had rejected money from Prime Minister Gordon Brown. Since then, Barclays stock has jumped 40 percent through May 11. The QIA’s original stake, purchased in July 2008, had tumbled as much as 82 percent by January. It’s now up 1.8 percent.

The QIA said on April 22 it had sold 35 million Barclays shares, lowering its original stake to 5.8 percent as part of a trading strategy. The Qatari fund said it still planned to increase its overall Barclays stake under the terms of the October deal.

Assets Drop

The value of Qatar’s 9.7 percent stake in Credit Suisse Group AG, Switzerland’s No. 2 bank, dropped to 4.93 billion Swiss francs ($4.45 billion) on May 11. Credit Suisse stock has lost 20 percent of its value since February 2008, when Hamad said he was first buying shares; it’s dropped about half a percent since October 2008, when he added more.

QIA assets, which peaked at about $75 billion in June 2008, dropped to about $50 billion at the end of March, according to estimates by RGE Monitor in New York, which researches sovereign funds. Qatar’s estimated $35.6 billion in 2008 LNG exports spared the fund from a worse decline.

“They got burned,” says Rachel Ziemba at RGE Monitor. “There was a lot of money to manage quickly and get it invested.”

At home, Hamad is deploying as much as $5.3 billion of QIA cash on shares of Qatari banks hammered in the global rout. In March, his government agreed to buy the investment portfolios of seven local banks traded on the Doha Securities Market.

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