Newspaper article The Evening Standard (London, England)

We've Left Door Open to Foreign Superpowers

Newspaper article The Evening Standard (London, England)

We've Left Door Open to Foreign Superpowers

Article excerpt


AT A CITY lunch last week there were two topics that dominated thediscussion.

One was taxmore of that elsewhere on this page and the other was sovereign wealth funds.

It's funny how subjects can instantly become all the rage when in fact they'vebeen there all along. I remember going to a similar round-table discussion afew years ago and the subject used to kick off the proceedings was privateequity.

This was well before the furore over their seemingly effortless profits andlucrative tax breaks. But they were grabbing attention due to a spate ofbuyouts. In truth, they'd been around for years, at least since the late 1980s.

They were not new. So it is with sovereign funds. Suddenly, we are living inmortal fear that the investment managers of foreign governments will overrunour land.

My God, the Qataris are buying Sainsbury's. Qatar and Dubai own nearly half theLondon Stock Exchange. Is nothing safe? Look back, however, and what do youfind? Twenty years ago, the City was reeling from the stock market crash of 19October. One of the ramifications of the share plunge was the government'sdifficulty in getting away the shares of BP, which it was privatising. In camethe Kuwait Investment Office and snapped up more than a fifth of the company.

It was a shocking move that led to a political row. Eventually, the Monopoliesand Mergers Commission restored calm by determining such a large stakeholdingby a foreign power was against the British public interest and requiring theKIO to reduce its stake to 10%.

Come back to the present and we are in a lather again. This time, however, thecircumstances are more markedthere are far more funds, they are much wealthier and in the case of thosebelonging to the oil-producing nations, they are keener to diversify before theday their pipelines run dry. …

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