Gulf funds as Abramovich’s Chelsea

Another day, another ambitious announcement from a Gulf sovereign wealth fund. Yesterday Qatar Investment Authority said it was to spend $15bn over the next year acquiring assets, today it is the turn of Dubai International Capital. The investment fund, owned by the ruler of Dubai, plans to invest $5 billion in China, India and Japan over three years.
"Clearly because of the growth in emerging markets, we believe companies having exposure to emerging markets will grow significantly as well," says the fund's chief operating officer, Anand Krishnan. DIC wants to raise its asset base from $13bn to $30bn by 2012.
With oil prices at record levels, these Gulf funds certainly have the money. The task will be to find the right deals. Announcing how much money you want to spend is not always the best way to secure the best price. In football terms, Chelsea’s takeover by Roman Abramovich, the Russian billionaire, inflated prices for all clubs: selling clubs knew Chelsea could pay any price, rival buyers were forced to cough up to keep up.
That’s not say Gulf funds can’t find the right deal, but they will need the best management. Chelsea, it is to be remembered, won its first League title for 50 years once Abramovich’s cash kicked in.