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1

KPMG‘s Media Institute:Sovereign Wealth Funds

1 October 2008

KPMG’s Media Institute

1This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2008 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights

reserved.

Speakers and hosts

Stuart Robertson, Head of Markets, Member of the Executive Committee KPMG Switzerland

Patrik Kerler, Partner, Head of Corporate Finance, KPMG Switzerland

Prof. Dr. Norbert Walter, Chief Economist, Deutsche Bank Group

Vijay Arumbakkam, Partner, KPMG United Arab Emirates

2


reserved.

Agenda

9.30 IntroductionStuart Robertson, KPMG Switzerland

9.45 Sovereign Wealth Funds: Structures, Funding, Issues, OutlookPatrik Kerler, KPMG Switzerland

10.15 Economic significance of Sovereign Wealth FundsProf. Dr. Norbert Walter, Deutsche Bank Group

11.00 Coffee Break

11.15 Sovereign Wealth Funds in the Middle EastVijay Arumbakkam, KPMG UAE

12.00 Lunch buffet

Sovereign Wealth FundsStructures, Funding, Issues, Outlook

Patrik Kerler, Head Corporate Finance

3


reserved.

History

• First SWF (Kuwait) established in the 1950-ies• Massive growth in numbers and assets over the last 10 – 15 years • Volumes up from USD 500 bn in the early 90ies to over USD 2 trillion as of today• Assets under Management (AuM) estimated to reach USD 8 trillion in 2011 and

USD 12 trillion by 2015

• Past track record: Conservative, low risk, long term, passive investments (government bonds and bank deposits)

• Major changes under way: Alignment of business model in analogy to PE houses; diversified portfolios/direct investments; intensive recruitment of specialists from PE houses, hedge funds, banks and other institutional investors


reserved.

Concerns of Western market economies

• What is a SWF and who is behind it?• Are SWFs a threat to Western economies or even Western civilization?• Will SWFs turn into active investors and possibly pursue political goals?• Will the current economic crisis in the Western world open the flood gates for

SWFs?• What roles are SWFs playing in the current crisis?• Are SWFs the white knights of the free market financial services system?

or

• are SWFs the logical consequence of a shift in global economic power?

4


reserved.

Major Sovereign Wealth Funds I/II

Commodity-basedSWFs

Non-commoditybased SWFs

• Norway: Government Pension Fund – Global (GPFG) $ 395

• Russia: National Welfare Fund $ 160

• Kuwait: Kuwait Investment Authority (KIA) $ 250

• Saudi Arabia: SAMA Foreign Holdings $ 300

• UAE: Abu Dhabi Investment Authority (ADIA) $ 875Others approx. $ 50

• Qatar: Qatar Investment Authority (QIA) $ 60

• Algeria: Revenue Regulation Fund $ 50

• Libya: Libyan Arab Foreign Investment Co. $ 50

Commodity based SWFs

(est. AuM inUSDbn)

•China/Hong Kong: SAFE Investment Company$ 310China Investment Corporation (CIC) $ 200Hong Kong MonetaryAuthority $ 170National Social Security Fund $ 70

•Singapore:Government of Singapore Investment Corporation (GIC)$ 330Temasek Holdings $ 160

•Australia:Australia Government Future Fund (AGFF) $ 60

Non-commodity based SWFs

(est. AuM in USDbn)

Quellen: SWF Institute, IMF, OECD, Schweiz. Bankiervereinigung


reserved.

Major Sovereign Wealth Funds II/II

0 100 200 300 400 500 600 700 800 900

AlgeriaLibyaQatar

AustraliaSingapore Tamasek

RussiaChina (CIC)

Kuwait (KIA)Saudi Arabia (SAMA)

China (SAFE)Singapore GIC

NorwayUAE

AuM USD bn

5


reserved.

Growth dynamics

52% 40% 39% 12%

48%

60%

61%

88%

0

2,000

4,000

6,000

8,000

10,000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2010 2015

Commodity

Non-commodity

10,000

5,000

3,300

AuM in USDbn

Source: IFSL estimates


reserved.

SWF investments since 2003

Source. Zawya Private Equity Monitor

05,000

10,00015,00020,00025,00030,00035,00040,000

2003 2004 2005 2006 2007 8 mo2008

051015202530354045

Investment SizeNumber of Investments

6


reserved.

SWF investment flows by industries



reserved.

SWF investment flows by geography


7


reserved.

Relative size/power of SWFs

0.8

1.9

3.3

19.1

27.3

28.5

0 5 10 15 20 25 30

Private Equity

Hedge Funds

SWFs

Insurance Funds

M utual Funds

Pension Funds

$ trillionSource: IFSL estimates


reserved.

Financial markets meltdown – What willSWFs do?

8


reserved.

Current status

• SWFs are controlling substantial funds with significant growth in numbers and AuMs• Major impact from current economic crisis on SWFs expected• SWFs are currently aligning their structures and strategies to market developments

- Recruitment: Vying for highly educated professionals from hedge funds, PE houses and other financial services institutions

- Structures: Emulating PE/Hedge Fund business models; partly dependenton form of nation government

- Rules & regulations: Adaptation as required to rules and regulations oftarget economies

• Current crisis is as much of a challenge to SWFs as it is for other market participants – SWFs will act quickly to minimize losses and maximize returns


reserved.

Governance, transparency, regulatory issues

Norwegian Pension Fund: best practice example in terms of governance, transparencyand ethicsInternational regulatory authorities• IMF: Generally Accepted Principles and Practices for Sovereign Wealth Funds (GAPP), also

referred to as „Santiago Principles“ to be presented at IMF Meeting, October 2008• OECD: Declaration on „Sovereign Wealth Funds and Recipient Country Policies“ adopted by

OECD countries’ ministers in June 2008• EU Commission: Calls for increased transparency, but is not planning any regulatory

measuresNational tendencies• Protectionist approach: USA, Germany, France, Japan, Canada, China, Russia• Liberal approach: Switzerland, Netherlands, Sweden, Austria, UKSwitzerland• SECO: Considers open markets as a must for Swiss economy and any protectionist

tendencies as potentially dangerous

9


reserved.

Outlook

• SWFs will accumulate increasing funds which need to be invested• SWFs‘ relevance as global market players will increase substantially• Depending on home-base and funding mode, SWFs are expected to develop

differently:- Chinese- Asia Pacific- Middle East- Europe/North America

• Increasing interdependencies between markets, economies and market participants will further strengthen SWFs position as global players

Conclusion: They are here to stay, and reflect a shift in global economic power


reserved.

Critical issues

• The sheer power of SWFs could lead to political abuse:- non free-market economies/plan economies- conflict of interest between economics and politics

• Certain SWFs could be moving from passive to active investor roles

• As a reaction, increased protectionism could develop

• Various potential implications of the current economic situation on SWFs role

1

Norbert WalterChief EconomistDeutsche Bank Group

Sovereign wealth funds –risks and opportunities for global financial markets

KPMG’s Media Institute

01. October 2008

Norbert Walter | Oct 01, 2008 | Page 2

Overview of SWF industry11

Implications of SWF growth and policy issues22

Agenda

2


SWFs – a USD 3.5 trillion business

Abu DhabiADIA

USD 900bnSingapore

GIC/TemasekUSD 461bn

NorwayNBIM

USD 401bn

Saudi ArabiaVarious

USD 360bn

KuwaitKIA

USD 264bn

ChinaCIC

USD 200bn

Hong KongHKMA-IP

USD 152bn

RussiaSFRF

USD 163bn

11

= No SWF

= Countries operating SWFs – darker colours indicating higher volumes of assets

Note: Global distribution of sovereign wealth fund assets: Assets under management by absolute amounts and country of domicile. Selected SWFs displayed. Total number of SWFs: 52. AuM as on Sep 03, 2008 estimated: USD 3.5tr.

0.0 20.0 40.0 60.0 80.0

Hedge funds

SWF

Reserves ex gold

Insurance companies

Pension funds

Public debt securities

Investment funds

HNWI assets

Private debt securities

World GDP

Stock market capitalisation

Bank assets

2005/20062006/2007

Indicators for size of markets worldwide, USD tr, latest available figures for 2006/2007, compared with previous year


Rationale of SWFs – sound economic objectives

Exhaustibility of natural resourcesTransitory nature of income streamsVolatility of commodity markets

Intertemporal stabilisationInternational diversificationRisk-return optimisation

Stylised facts

SWF objectives

11

0

10

20

30

40

50

60

98 00 02 04 06Brent Oil Gold US Treasuries S&P 100

Asset volatility in comparisonPrice volatilities measured by standard deviations from 90-day moving averages in %

3


Distinctive features: state-ownership, broad range of investment strategies, un-regulated operations

Investment fundSWFPrivate

EquityHedge Fund

Pension fundInsuranceInvestor

Management intervention1)

Origin of assets1)

Retail investorsStateHNWIInstitutional

- Equity - Equity- Bonds- Foreign

exchange- Derivatives- others

PassiveActive/passiveActive Active/passive PassivePassive

- Mergers- Acquisitions- Equity - Bonds- Foreign

exchange- HF, PE- Derivatives- others

- Equity - Bonds- Foreign






Investment universe1)

Specific regulation1) CoB/IP/RR2)―― ― CoB/IP/RR2)CoB/IP/RR2)

1) Indicative. In selected cases deviations possible.2) CoB = Conduct of Business, IP = Investor Protection, RR = Reporting Requirements

11


Investment trends: Europe, US, Asia as prime targets …

Since 1995, worldwide total of reported and completed transactions with SWF involvement USD 178bn in 328 transactions

Europe, America and Asia have been preferred targets

- Europe 32%- America 37%- Asia 28%

11

Asia28%

Afrika0%

Australia1%

Middle East2%

EU24%

Other Europe

8%

North America

37%

South America

0%

SWF investment by target region

Investments with SWF participation by origin of recipient companies, reported and completed transactions, 1995-2008YTD, % of total volume

4


… owing to investments in wake of financial crisis …

11

0 60,000 120,000

Agriculture

Defence

Other

Industry

Infrastructure

Technology

Services

Energy

Real estate

Finance

EU

US

Asia

Others

SWF investments by sector

SWF investments by sector of investment target and region, reported and completed transactions, 1995-2008, in USD bn

SWF investments by sector

-100

-80

-60

-40

-20

0

20

07 08

DB MLMS CGBA CSUBS

Investment performanceShare prices of major banks with SWF investment, 01 Jan 07=100

Note: DB=Deutsche Bank, ML=Merrill Lynch, MS=Morgan Stanley, CG=Citigroup, BA=Barclays, CS=Credit Suisse, UBS


… making SWFs – temporarily – the saviours of Wall Street and beyond

11

Bank SWF % USD bn Date Bank SWF % USD bn Date

UBS CH GIC 9.0 9.7 Dec-07 Merrill Lynch

US Temasek 10.3 3.4 Jul-08

Citigroup US ADIA 4.9 7.5 Nov-07 Barclays Bank

GB CDB 3.1 3.3 Jul-07

Citigroup US GIC 4.5 6.9 Jan-08 Bank of China

CN Temasek 10.0 3.1 Aug-05

Merrill Lynch US Temasek 9.9 5.0 Dec-07 Blackstone Group

US CIC 9.9 3.0 May-07

Morgan Stanley

US CIC 9.9 5.0 Dec-07 LSE GB QIA 24.0 2.2 Sep-07

Standard Chartered

GB Temasek 18.0 4.5 Mar-06 Barclays Bank

GB Temasek 2.1 2.0 Jul-07

Barclays Bank GB QIA 8.9 3.5 Jun-08 Merrill Lynch

US KIC 3.3 2.0 Jan-08

Merrill Lynch US KIA 5.7 3.4 Jan-08 LSE GB DIFX 28.0 1.9 Sep-07

UBS CH NN 1.6 1.8 Dec-07

5


EU: UK, Germany, France get major share of commitments

11

0.00.00.20.30.30.30.61.01.11.32.0

3.85.1

26.0

0 5 10 15 20 25 30

BE

PT

FI

M T

IT

AT

GR

SE

ES

NL

DK

FR

DE

UK

Investments in EU member states

Investments with SWF participation in EU by origin of recipient companies, reported and completed transactions, 1995-2008YTD, USD bn

0.3

0.8

4.6

5.0

5.9

6.3

26.9

0 5 10 15 20 25 30

Technology

Defence

Real estate

Commodities

Industry

Services

Finance

EU: SWF investments by sector

Investments with SWF participation in EU by sectors of recipient companies, reported and completed transactions, 1995-2008YTD


Asia: About to re-emerge as investment location

11

0

5

10

15

20

25

30

35

40

08YTD07060595-04

EU USAsia OtherR ih 5 R ih 6

SWF investments over time

Investments with SWF participation by time period, reported and completed transactions, in USD bn

0.10.10.4

2.32.6

3.14.24.4

5.16.06.26.2

10.2

0 2 4 6 8 10 12

VN

PH

PK

IN

KR

JP

ID

TH

TW

SG

MY

HK SAR

CN

SWF investments in Asia

Investments w ith SWF participation in Asia by origin of recipient companies, reported and completed transactions, 1995-2008YTD, in USD bn

6


Increasing income and reserves …

11

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

01 02 03 04 05 06 07

OthersMiddle EastLatin AmericaIndustrialised countriesAsia

Official reserves

Official reserves held by central banks, USD bn, and % of total USD 6.4tr at end-07

23%

2%6%

23%

46%

-1,500

-1,000

-500

0

500

1,000

1,500

90 92 94 96 98 00 02 04 06

US OthersOPEC, RU CNJP DE6 Tigers

USD bnCurrent account balances


… to sustain continued SWF asset growth

11

Potential fund inflow to global equity and debt markets from SWFs over 5Y and 10Y horizon based on above growth scenarios and 40% equity and 60% debt portfolio distributions by SWFs, in USD tr.

0

10

20

30

40

50

06 11 16

42

Equity

010203040506070

06 11 16

60

Fixed income+ 1.5tr + 4.6tr

+ 1.0tr + 3.1tr

Potential fund inflow to global equity and debt markets from SWFs over 5Y and 10Y horizon based on above growth scenarios and 40% equity and 60% debt portfolio distributions by SWFs, in USD tr.

0

10

20

30

40

50

06 11 16

42

Equity

010203040506070

06 11 16

60

Fixed income+ 1.5tr+ 1.5tr + 4.6tr+ 4.6tr

+ 1.0tr+ 1.0tr + 3.1tr+ 3.1tr

0

10

20

30

40

50

60

06 07 08 09 10 11 12 13 14 15 16 17 18 17 18 19 20

SWF growth scenarios

Expected growth of SWF AuM, based on past 10Y growth of official reserves assets, USD tr

Actual f iguresProjected volume of AuMCorridor of potential alternative paths of AuM grow th

7


Overview of SWF industry

22 Implications of SWF growth and policy issues

11

Agenda


Policy implications

SWFs systemically relevant─ Herding behaviour─ Contagion effects─ In extremis, destabilisation of market

segments, regions, global financial industry

Risks aggravated by intransparency

22

SWFs as state entities not in line with free market economy─ Funds not refinanced at market

conditions─ Funds not originated from market

activity

Concerns regarding corporate control

Financial market stability State funding and control

► Ensure greater transparency of SWFs

► Secure appropriate internal SWF governance

► Improve internal governance of SWFs

► Establish reasonable investment rules in recipient countries (security-related issues only)

8


Principles for optimal policies

Open markets

Symmetry in open market access

Equal treatment of foreign investors

Proportionality of policy measures

Transparency of policy rules

Minimal political intervention

International cooperation and standards (OECD)

22

SWF code of conductInvestment policy

Transparency― Objectives― Portfolio size and structure― Resources― Institutional framework― External audit

Governance― Commercial objectives― Independence from government― Good internal governance ― Robust risk management― Fair competition with private sector

International cooperation and standards (IMF)


Welcome major policy initiatives

22

SWF code of conductInvestment policy

― Agreement on Principles for SWF Investment with Singapore and Abu Dhabi, Mar 20, 2008

― FINSA reform of CFIUS, Jul 2007

― Commission Communication on a Common European Approach to Sovereign Wealth Funds, Feb 27,2008

― OECD investment standards to be issued by mid-2009

― Proposed amendment to Foreign Trade Act, to be adopted by end-08

― “CFIUS light”

― Tightening of investment screening process, Feb 17, 2008

― Tightening of Foreign Investment Law, Apr 2, 2008

― 42 restricted sectors

― International Working Group of SWFs― Generally Agreed Principles and

Practices (GAPP) at 08 IMF Meeting

― Agreement on Principles for SWF Investment with Singapore and Abu Dhabi, Mar 20, 2008

― Commission Communication on a Common European Approach to Sovereign Wealth Funds, Feb 27,2008

― Singapore and Abu Dhabi Agreement with US on Principles for SWF Investment, Mar 20, 2008

9


© Copyright 2008. Deutsche Bank AG, DB Research, D-60262 Frankfurt am Main, Germany. All rights reserved. When quoting please cite “Deutsche Bank Research”.

The above information does not constitute the provision of investment, legal or tax advice. Any views expressed reflect the current views of the author, which do not necessarily correspond to the opinions of Deutsche Bank AG or its affiliates. Opinions expressed may change without notice. Opinions expressed may differ from views set out in other documents, including research, published by Deutsche Bank. The above information is provided for informational purposes only and without any obligation, whether contractual or otherwise. No warranty or representation is made as to the correctness, completeness and accuracy of the information given or the assessments made. In Germany this information is approved and/or communicated by Deutsche Bank AG Frankfurt, authorised by Bundesanstalt fürFinanzdienstleistungsaufsicht. In the United Kingdom this information is approved and/or communicated by Deutsche Bank AG London, a member of the London Stock Exchange regulated by the Financial Services Authority for the conduct of investment business in the UK. This information is distributed in Hong Kong by Deutsche Bank AG, Hong Kong Branch, in Korea by Deutsche Securities Korea Co. and in Singapore by Deutsche Bank AG, Singapore Branch. In Japan this information is approved and/or distributed by Deutsche SecuritiesLimited, Tokyo Branch. In Australia, retail clients should obtain a copy of a Product Disclosure Statement (PDS) relating to any financial product referred to in this report and consider the PDS before making any decision about whether to acquire the product.

1

KPMG in the UAE

Vijay ArumbakkamPartner

Sovereign Wealth Funds – An UAE PerspectiveZurich – 1 October 2008

2© 2008 KPMG, KPMG LLP and KPMG Lower Gulf Ltd, member firms of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International.

• UAE – Explained

• The “Ai” Factor

• SWF’s Vs SWE’s ????

• Good Intent But Opaque….

• Conclusion

Content

2


Abu Dhabi

DubaiFujairah

Ras al KhaimahUmm Al Quwain

Ajman

Sharjah

Fujairah

Abu Dhabi

Abu Dhabi

Ajman

Fujairah

Sharjah

Dubai

Ras Al Khaimah

Umm Al Quwain

The United Arab Emirates


Financial Services

Tourism

Retail

Transportation

Real Estate & Construction

DubaiConstruction

Tourism

Real Estate

Oil & Gas

Abu Dhabi

Manufacturing

Construction

Real Estate

Tourism

Ras Al Khaimah

UAE- Key Drivers For Economic Growth

3


UAE Forecast – Key Indicators

4.855.035.335.645.735.03Exchange rate Dh:€ (av)

3.673.673.673.673.673.67Exchange rate Dh:US$ (av)

84.24.911.719.717.4Current-account balance (% of GDP)

12.31315.715.920.515.2Budget balance (% of GDP)

5.569131614Consumer price inflation (av; %)

6.16.67.27.68.47.5Real GDP growth (%)

201220112010200920082007Key indicators

Source: Economic Intelligence Unit


ai ai

ai

Shangh Mumb

Dub

Global Shift in Financial Capital –” Ai Factor”

4


Largest Sovereign Wealth Funds

UAE

NorwaySingapore

GCC

Saudi Arabia

Kuwait

China

Singapore -(Tamasek Holdings)

Libya

Algeria

Qatar

US (Alaska)

Estimated Assets (US $ millions)

Co

un

try

Source: Morgan Stanley Sept 2007


Abu Dhabi Investment Authority (ADIA)

Abu Dhabi Investment Company (ADIC)

Mubadala Development Company

SWF’s

International Petroleum Investment CompanyAbu Dhabi National Energy Company

Dubai GroupAmlak Finance

Emaar Dubai World

DP WorldIstithmarLimitlessNakheel

Dubai International CapitalRAK Investment Authority

SWE’S

SWF’s Vs SWE’s

5


TAQA – Abu Dhabi National Energy Company

International Petroleum Investment Company

Mubadala Development Company

Abu Dhabi Investment Company

Abu Dhabi Investment Authority

AUH

9.0

6.5

10.0

c. 100.0

c. 700.0 -750.0

Estimated Asset size in $US bn.

Dubai International Capital (DIC) (Subsidiary of Dubai Holdings)

Tatweer

Istithmar (subsidiary of Dubai World/ICD)

Dubai World

Dubai Group (Subsidiary of Dubai Holdings) (incl. Dubai Capital, Dubai Financial, Noor Investment, Dubai investment, Dubai Islamic)

Dubai

12.0

n/a

2.6

3.2

n/a


RAK Investment Authority

Ras Al Khaimah

1.2


Estimated Assets


SubprimeBailout4.90%FinancialsUnited StatesCitigroup

ADIC (SWE)5.10%TechnologyUnited StatesZiopharm Oncology Inc

7.60%IndustrialsEgyptSuez Cement Company

8.30%FinancialsEgyptEgyptian Financial Group Hermes Holding Company

ADIC (SWE)9.80%FinancialsBermudaMacquarie International Infrastructure Fund Ltd

ADIC (SWE)16.00%Trust CompanyUnited KingdomEastern European Trust Plc

Comments% OwnershipIndustryCountryCompany

9%Private Equity FundUnited StatesApollo Management LP

~20%Private Equity FundUnited StatesAres Management LLC

% OwnershipTypeCountryCompany

Major Direct Foreign Investments (Public)

Major Direct Foreign Investments (Private)

Abu Dhabi Investment Authority - Key Investments

6


Mubadala - Key Investments

5.00%ItalyFerrari

8.10%TechnologyUnited StatesAdvanced Micro Devices

8.33%IndustrialsGuineaGuinea Alumina Corporation

22.80%Consumer GoodsNetherlandsSpyker Cars

% OwnershipIndustryCountryCompany


7.50%Private Equity FundUnited StatesCarlyle Group

25%Joint VentureNetherlandsLeasePlan Corporation

35%Private StockItalyPiaggio Aero Industries

40%Private StockSwitzerlandSR Technics

Real Estate51%Joint VentureUnited StatesJohn Buck International

100%BuyoutSingaporePearl Energy Ltd.

Comments% OwnershipTypeCountryCompany



Investment Corporation of Dubai - Key Investments

Dubai International Capital Investment(Subsidiary)~2%AutoGermanyDaimlerChrysler AG

Dubai International Capital Investment(Subsidiary)2.87%FinancialsIndiaICICI Bank Limited

Dubai International Capital Investment(Subsidiary)3.12%DefenseNetherlandsEADS N.V.

Dubai World(Subsidiary)8.87%Consumer ServicesUnited StatesMGM Mirage

Istithmar (Subsidiary)8.80%IndustrialsSingaporeHyflux Ltd

Dubai Group --> Dubai Holding (Subsidiary)9.07%FinancialsGreece

Marfin Investment Group Holdings SA

Dubai Holding (Subsidiary)9.20%Consumer ServicesUnited StatesOrient Express Hotels Ltd

Dubai Group --> Dubai Holding (Subsidiary)10.89%ChinaChina Enersave Ltd

Borse Dubai (Subsidiary)20.60%FinancialsUnited KingdomLondon Stock Exchange Group

Borse Dubai (Subsidiary)43.60%FinancialsUnited StatesNasdaq OMX Group Inc

Dubai Holding (Subsidiary)51.40%FinancialsUnited StatesOch Ziff Capital ManagementGroup LLC

Dubai World (Subsidiary)98.40%IndustrialsSingaporeLabroy Marine

Comments% OwnershipIndustryCountryCompany


7


Dubai World37.88%InvestmentChinaBeng Kuang Marine Ltd

Dubai Investment Group40%%PrivateIndiaChiranjjeevi Wind Energy Ltd

Istithmar World Capital - Dubai World40%%Private

United KingdomESPA International

Istithmar (Subsidiary)100%SubsidiaryUnited KingdomInchcape Shipping Services

Istithmar (Subsidiary)100%SubsidiaryUnited StatesLoehmann's Holding Inc

Istithmar (Subsidiary)100%SubsidiaryUnited StatesBarneys New York

Dubai International Capital (Subsidiary)100%SubsidiaryGermanyMauser AG

Dubai International Capital (Subsidiary)100%Subsidiary

United KingdomTravelodge UK

Comments% OwnershipTypeCountryCompany


Investment Corporation of Dubai - Key Investments


“ Malaysian infrastructure firm UBGBerhad and Mubadala Development Company, the Abu Dhabi Government investment Agency, have agreed to form a 50-50 Joint Venture to develop petroleum projects in the Southeast Asian country”

LIMITLESS has taken over a Dh. 6.2 bn. venture in the Indonesian Capital of Jakarta. This is the latest addition to its portfolio of 11 developments overseas

“Abu Dhabi’s telecom major Etisalat acquired 45% stake in Dubai Swan Telecom, a new Indian telecom venture”

“ Meras Holding, an investment and Real Estate company was launched in Dubai to create integrated master-planned communities by focusing on comprehensive urban planning

Taqa Energy B.V., has also signed a farm-in agreement with Cirrus Energy Corporation with respect to three licences and one unit area in the Dutch North Sea.

.. The National

..The National

.. Gulf news

..: Gulf news

..Gulf news

Recent Announcements – 28 September 2008

8


“Syndication of a $6bn multi-currency loan split between three- and five-year tranches by Investment Corporation of Dubai (ICD), the investment arm of the government of Dubai, is expected to begin by late August.

…MEED Aug 08 “Ras Al Khaimah Investment Authority (Rakia), the government agency responsible for the

economic development of the emirate, will launch its first ever sukuk issue tomorrow of $500 million” …. Gulf News Nov. 07

“Development company Limitless plans to raise $1.2bn through a syndicated loan in the next few months and began a roadshowmarketing the deal to investors”…MEED Jan 08

Debt…


Good Intent But Opaque…..Common Concerns

• What are they going to do with the money?

• Investment goals and behavior?

• Will they be used as a foreign policy tool?

• Are they politically motivated?

• Opportunistic?

9


Conclusion

• UAE SWF’s/SWE’s are here to stay

• The world needs them given the current financial crisis/credit crunch

• UAE SWF’s are taking steps through the IWG –International Working Group of Sovereign Wealth Funds to arrive at guidelines on transparency

• They understand their responsibility and are also aware of the political/cultural sensitivities around their investments

• Their primary objective is to earn a decent return on their investments

• Recipient countries/companies must understand that too much transparency will make SWF’s/SWE’s uncompetitive

18© (year) KPMG (member firm name if applicable), the (jurisdiction) member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in (country).(Insert document code)

PresenterPresenter’’s contact s contact detailsdetailsVijay ArumbakkamVijay ArumbakkamPartnerPartnerKPMG in the UAEKPMG in the UAEwww.aewww.ae--kpmg.comkpmg.com

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KPMG’s Media Institute KPMG‘s Media Institute · KPMG‘s Media Institute: Sovereign Wealth Funds 1 October 2008 KPMG’s Media Institute ... intensive recruitment of specialists