Bahraini sovereign fund Mumtalakat will not sell assets or change its investment strategy in response to a likely oil price-driven shortfall in the state budget, it has confirmed. The fund holds stakes in Bahraini companies including Alba, Gulf Air and Batelco.
Mumtalakat is fully state-owned, but unlike a sovereign wealth fund it receives no surplus cash from the government, investing money generated from its own returns.State inflows to sovereign funds are in doubt this year across the Gulf region. Governments are expected instead to pull tens of billions of dollars out of global markets to help plug deficits created by maintaining high spending at a time when oil prices have fallen the best part of 60 per cent since June.
Mumtalakat said it was not expecting Bahraini authorities to dip into its asset pool to fund any cash shortfalls. “The Bahrain economy is sufficiently robust and diversified to make any outflow from our fund or any other sales, transfers or privatisations unnecessary,” it said. It noted that non-hydrocarbon sources accounted for more than three-quarters of Bahrain’s GDP, reducing exposure to oil price fluctuations.
In terms of strategic changes for Gulf economies in light of the shifting economic backdrop, Mumtalakat believed it would not need to amend its approach, although it noted greater due diligence would be needed to uncover long-term opportunities amid the short-term volatility. The fund has been looking outside Bahrain in recent months for new acquisitions. Last October, it announced a deal with Bahrain-based Investcorp to acquire US software and services firm PRO Unlimited for around $300 million, as well as buying a significant minority stake in UAE-based GEMS Education along with Blackstone and Dubai’s Fajr Capital.
This report originally appeared in Gulf Daily News