Mumtalakat – Bahrain Investments for Future Generations

Prominent examples are the SWFs of the oil-rich emirate of Abu Dhabi, called ADIA and Aaabar Investments. The latter fund surprised international financial markets in March this year with its investments when it bought a 9.1 percent stake in Germany’s troubled car leader, Daimler AG. Qatar became the biggest shareholder of Switzerland’s top bank, Credit Suisse, with a near-10 percent worth of investments.

But Bahrain’s investments fund – Mumtalakat was much less in the limelight than the SWF heavyweights from Abu Dhabi, Kuwait, and Qatar. Established in June 2006 by Royal Decree, Bahrain investments fund – Mumtalakat now manages a portfolio of around USD 10 billion investments, focused primarily in Bahrain.

Bahrain investments fund – Mumtalakat is an active shareholder and investor in diverse Bahrain investments and industry sectors in more than 35 commercial enterprises such as Gulf Air and Aluminum Bahrain (Alba).

“We are part of the Economic Vision: Bahrain 2030,” says Talal Al-Zain , Mumtakalat’s CEO (portrait on the left).

The strategic plan launched in November 2030 promises coordinated reforms in order to ensure three economic principles: sustainability, competitiveness, and fairness. Although the Global Competitiveness Report for 2008-2009 has ranked Bahrain N°37 in the world among 134 economies, King Hamad bin Isa Al-Khalifa does not want his fellow citizens to lie on their laurels.

Mumtalakat’s CEO agrees: “To Mumtalakat, the mandate is to develop wealth for the country and the people of Bahrain, and that is Bahrain investments fund contribution to the economy and to Bahrain investments”, Mr. Al-Zain says with an audible sound of pride in his voice.

“Secondly, His Highness the Crown Prince, through the Economic Development Board, always emphasized human capital and for us, as Mumtalakat, one way to contribute to the country is to develop the Bahraini talent through our Bahrain investments as well as through Mumtalakat itself.”

Controversial at first, meanwhile most welcome investments

At first the investments funds were judged as a ‘threat’ to the Western world. When Arab sovereign wealth funds began investing in tumbling banks at the end of 2007, the media in Europe and the US argued that the operating range of these oriental investment vehicles, pumped up with trillions of petrodollars, should be limited, and politicians of all stripes agreed.

With the financial crisis deepening, however, the tone has changed. Bahrain Investments and investments from the Middle East are suddenly more than welcome. And according to the SWF Institute in Roseville, Canada, Bahrain’s Mumtalakat Holding Company is the most transparent wealth fund in the Middle East.

But how deep is the impact on the Arab aristocratic states themselves? Al-Zain: “Our Minister of Finance, HH Sheikh Ahmed bin Mohamed Al Khalifa was correct in his assessment of the economy, saying that 2009 will be a challenging year.” Mr. Al-Zain defies these challenges.

He remains optimistic about Bahrain investments and Bahrain’s banking sector, the latter contributes 27 per cent to the country’s GDP. “Our ratio of loans against deposits is around 65 per cent, which is a very healthy and strong percentage,” he says.

Last but not least, to him, leading SWF does not mean relying entirely on the money from investments. “Through the Economic Development Board, we are trying to attract direct foreign investments, development industry, and we are leveraging our competitive advantages such as free trade agreements with the US and Singapore”, Talal Al-Zain says.