The $60 billion Qatar Investment Authority said on Monday it saw "tremendous opportunities" for sovereign wealth funds like itself to invest in U.S. financial-services firms battered by a mortgage market crisis.
The Abu Dhabi Investment Authority, the world's largest sovereign wealth fund, agreed to invest $7.5 billion in Citigroup last month, with the U.S. bank facing more than $17 billion in second-half writedowns from credit market losses.
"There are tremendous opportunities for sovereign wealth groups which can react quickly and confidentially," Kenneth Chen, head of strategic and private equity at Qatar Investment Authority, said on Monday.
"The financial institutions sector should be one that investors should be looking at," Shen told reporters in Dubai on the sidelines of a private equity conference.
The U.S. property crisis is "the worst in 20 to 25 years," Shen said, declining to be more specific about any QIA interest. "2008 is going to be an interesting year," he said.
The influence and size of sovereign wealth funds, the top 20 of which control about $2 trillion of assets, will "continue to grow, and perhaps anxiety associated with that will grow as well," Shen said.
Those concerns should ease as funds like Abu Dhabi Investment Authority buy more into financial institutions like Citigroup because they take a long-term view and do not necessarily seek control, Shen said. "Control is not necessarily a must," he said.
The funds could also join with private equity firms to make acquisitions, Shen said.