Qatar Investment Authority aiming to invest in credit market amid new opportunities

Qatar Investment Authority, the Gulf state’s $445 billion sovereign wealth fund, is looking to invest in credit space amid new opportunities, its chief executive has said.

“For the last two years, we have been very active in the credit space … companies that have been feeling the tide and they have very good business models, but they have an issue with their balance sheet because of the acceleration of hikes of interest rates,” Mansoor Ebrahim Al-Mahmoud told Bloomberg’s Qatar Economic Forum on Tuesday.

“So normally, an institution like us who are very liquid, very long term, have a risk appetite in these types of investments … I would advise that for the next, maybe, one year, credit space would be an interesting space to deploy some investments.”

Opportunities for private credit have increased globally amid higher interest rates.

The private credit industry, or nonbank lending, is estimated to be worth about $1.3 trillion. Private credit accounted for about 17 per cent of total credit last year and has increased by 14 per cent each year since 2000 – about twice the rate of public credit, according to Bank of America Merrill Lynch.

QIA also has investments in a number of other sectors including real estate, infrastructure, technology, health care, retail and consumer, among others.

Mr Al-Mahmoud, however, did not disclose the regions or countries in which the Doha-based fund plans to invest.

“The region allocation is really governed by a long-term vision that we have whether this is for the US market or Europe or emerging markets like China, India, Brazil,” he said.

“In each market, you need to have your own sort of process and assessment to identify opportunities. So for example, the rhythm [with which] we are investing in technologies in China and India would be a little bit more than the rhythm [with which] we are investing in technologies in Brazil.

“So each market will have its own characteristic to really identify some of the opportunities that you would deploy.”

In February, QIA participated in the US-based Ariel Alternatives’ $1.5 billion inaugural private equity fund to invest in mid-market companies spanning sectors including retail, energy and infrastructure, financial services, health care, sovereign and private wealth, and technology, according to its website.

The fund is examining artificial intelligence as a theme of investment, Mr Al-Mahmoud said.

“From time to time, we tell our teams that this is very important and this is coming … please look at that, make sure that we build a portfolio that taps into this theme,” he said.

QIA has been investing in AI and “we need some sort of legislation that could manage this”, he added.

The fund is also leading a $250 million series D funding round in London-based Builder.ai, an AI-powered “composable” software platform that allows everyday businesses and people to turn their ideas into software.

The latest funding round also included participation from additional existing and new investors including Iconiq Capital, Jungle Ventures and Insight Partners.

Qatar’s sovereign wealth fund has also invested $450 million in a unit of Indian power company Adani Transmission for a 25.1 per cent stake in 2020 and that business “doesn’t have any issues”, Mr Al-Mahmoud said.

Billionaire Gautam Adani's conglomerate, which has interests ranging from ports to power, has lost billions in market value following US short-seller Hindenburg Research's scathing report on January 24.

Hindenburg Research accused companies controlled by Mr Adani, at the time Asia's richest person, of being involved in “brazen” market manipulation and accounting fraud.

The company and Mr Adani have both denied any wrongdoing.