Abu Dhabi government-owned IPIC and Qatar Investment Authority (QIA) will establish a $2 billion fund for global acquisitions, the managing director of IPIC said on Tuesday.
"We plan to invest in all sectors, including oil and petrochemicals," Khadem al-Qubaisi told Reuters by telephone in an interview.
The fund could thus mark a new direction for the International Petroleum Investment (IPIC), which until now has limited its investments to the energy sector.
IPIC is an investment vehicle for the government of Abu Dhabi, which controls more than 90 percent of the United Arab Emirates' oil reserves.
QIA is Qatar's sovereign wealth fund. Its assets stand at around $60 billion, according to an estimate by Standard Chartered.
"We will look at any opportunities where we can make money and add value. That could be anywhere -- the Middle East, Asia, Africa, Europe and the United States," Qubaisi said.
The new fund has yet to identify any specific targets, he said.
IPIC and QIA will each invest $1 billion in the fund initially, Qubaisi said. Investment will be leveraged to maximize acquisition potential, and the fund will be operating in about six months, he said.
IPIC and QIA investment in the fund will likely be increased later.
"We will be conservative with the first investments and build carefully," he said. "You cannot be aggressive from day one."
Sovereign funds from the Middle East, Asia, Russia and China have poured billions of dollars into large stakes in Wall Street firms, arousing concern among U.S. lawmakers that politics may be influencing investments.
U.S. and Abu Dhabi officials agreed last week on a set of principles for the funds to keep politics out of decisions.
The Abu Dhabi Investment Authority (ADIA) is thought to be the largest sovereign fund in the world, controlling assets of over $800 billion. The UAE is the world's fifth-largest oil exporter, and its government has reaped the windfall from a five-fold increase in crude prices since 2002.
Funds including QIA and ADIA have helped rescue struggling Western banks in recent months.