While the world is busy talking about the inflationary impact of the soaring oil prices, the oil producers are having a hearty laugh, because
they have their coffers overflowing with petrodollars. According to a study carried out by Cambridge Energy Research Associates, “In 2000, OPEC countries earned $243 billion from oil exports, in 2007, the estimated exports are slated to cross $688 billion.” And in order to manage these piling petrodollars, the oil producing nations, especially from the Gulf, are busy shopping around the world, to increase their stakes in firms, which are in dire need of funds.
It was recently announced that the Abu Dhabi Investment Authority is putting in about $7.5 billion in Citigroup to become one of the largest shareholder. Similarly Dubai Stock Exchange is also looking to get 20% stake in a company that includes Nasdaq and the operator of stock markets in Nordic region.
Private Equity funds – another area where the petrodollars are flowing into. Earlier this year, Dubai had shopped for a larger pie in Och-Ziff Capital Management, a New York based hedge fund & Carlyle Group. Now, the question is, are these petrodollars flowing back into the US alone or is there some diversification? According to Diana Farrell, Director of McKinsey Global Institute, “The investments are diversifying outside the United States, though the US still has the bulk of it, Europe is a prime target,” she added, “but at least 25% of foreign investments from the Gulf, are in Asia, the Middle East and North Africa.” Such flow of funds back into the economies suffering from high oil prices is in fact good.
The US suffering from subprime syndrome would welcome the funds from Gulf, but their problem obviously is to know the credentials of the investors. The US would in no case overlook the fact that in such desperate times, the chances of doggy money can also come in. And we all know that unclean money has the potential to cause loads of social, security & political problems.
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Source : IIPM Editorial, 2008
they have their coffers overflowing with petrodollars. According to a study carried out by Cambridge Energy Research Associates, “In 2000, OPEC countries earned $243 billion from oil exports, in 2007, the estimated exports are slated to cross $688 billion.” And in order to manage these piling petrodollars, the oil producing nations, especially from the Gulf, are busy shopping around the world, to increase their stakes in firms, which are in dire need of funds.It was recently announced that the Abu Dhabi Investment Authority is putting in about $7.5 billion in Citigroup to become one of the largest shareholder. Similarly Dubai Stock Exchange is also looking to get 20% stake in a company that includes Nasdaq and the operator of stock markets in Nordic region.
Private Equity funds – another area where the petrodollars are flowing into. Earlier this year, Dubai had shopped for a larger pie in Och-Ziff Capital Management, a New York based hedge fund & Carlyle Group. Now, the question is, are these petrodollars flowing back into the US alone or is there some diversification? According to Diana Farrell, Director of McKinsey Global Institute, “The investments are diversifying outside the United States, though the US still has the bulk of it, Europe is a prime target,” she added, “but at least 25% of foreign investments from the Gulf, are in Asia, the Middle East and North Africa.” Such flow of funds back into the economies suffering from high oil prices is in fact good.
The US suffering from subprime syndrome would welcome the funds from Gulf, but their problem obviously is to know the credentials of the investors. The US would in no case overlook the fact that in such desperate times, the chances of doggy money can also come in. And we all know that unclean money has the potential to cause loads of social, security & political problems.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
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