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Libya Ready to Deploy Its New $40bn Fund
Real estate news By African Path
October 22, 2007 03:19 PM
The government's stated strategy As part of a strategy to reduce the country's oil dependence and diversify sources of income, Libya has established a sovereign wealth fund is starting to deploy its $40bn (EU28bn) capital on international markets. Libya allocated tens of billions of dollars that had been managed by the central bank to a new entity, the Libyan Investment Authority (LIA), which will now also receive a portion of the surplus oil revenues each year.
In an interview with the Financial Times published last week, LIA's Executive Director Mr. Mohamed Layas said "because of sanctions our policy used to be to protect our assets and keep our funds in short-term deposits." “After the embargo was lifted, it was a new era, a new opening, and we had a tremendous increase in oil revenues over the last five years," he added. Mr Layas said the fund, which will have offices in London and Tripoli, would concentrate at first on portfolio investments managed through western banks and institutions. But it also intends to buy real estate worldwide and, when it is more established, look at private equity transactions. "If we buy shares in a construction company abroad, for example, the other benefit is that we will generate business for them in Libya, where we have a huge development plan," he said.
Although not its primary target, the LIA is also considering investing in hydrocarbon development projects. It was a small partner in the $900m exploration contract BP signed with Tripoli in May. Still largely under-explored, Libya is hoping to increase its oil production from 1.7m to 3m barrels per day by 2015. The LIA has set up a $2bn investment fund with its counterpart in Qatar to invest in Libya, Qatar and western markets. It has taken on three existing entities: the $5bn Libyan African investment portfolio; Lafico, a $3bn assets investment company mainly involved in real estate; and an $8bn existing portfolio of other international investments, largely in capital markets.
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