Kuwait sovereign fund chief says he’s worried about private equity

Amid the influx of private equity firms to the Gulf’s financial capitals, the head of Kuwait’s $1 trillion sovereign wealth fund says the industry must be handled with caution.

Speaking at the Qatar Economic Forum in Doha Wednesday, Sheikh Saoud Salem Al-Sabah, Managing Director of the Kuwait Investment Authority, warned that some international money managers are struggling to return funds to investors because of inflated valuations.

“Private equity is very troubled, I believe, especially in the large buyouts, venture capital and the rise of continuation vehicles,” Sheikh Saoud said in a panel discussion on the second day of the three-day conference. “That’s a very worrying sign.”

The KIA is the second largest sovereign wealth fund in the Gulf, trailing the Abu Dhabi Investment Authority and slightly ahead of Saudi Arabia’s Public Investment Fund.

The region’s six biggest funds oversee assets of about $4 trillion, and many of them have historically been significant backers of private equity firms, according to Bloomberg, the chief media partner for the annual Doha summit, which is underwritten by the Qatari government.

Also speaking at the conference today was Steven Mnuchin, the former U.S. Treasury Secretary and present Managing Partner of Liberty Strategic Capital, who counseled patience in trade negotiations with China.

“If the U.S. can level the playing field and get better access for the country’s businesses in China, the opportunity is massive,” he said.

Days after U.S. President Donald Trump returned to Washington from a trip that took him to Saudi Arabia, Qatar and the UAE, his son Donald Trump Jr. appeared at the Doha conference and said The Trump Organization won’t “do direct deals” with foreign government entities.

While his father has been criticized for entertaining an offer from the government of Qatar to receive a $400 million Boeing 747 plane as a gift to replace Air Force One, the younger Trump said the family business is being cautious about its international connections. 

“We’re going to play by the rules and it’s as simple as that,” he said.