Countrys wealth fund equals 75% of the economy

Sunday, Feb 27, 2011

Gulf News

Investment is carried out via London, US

Dubai: There is no reliable data on how rich Libya might be in terms of accumulated wealth in its sovereign wealth fund. It is estimated that the Libyan Investment Authority (LIA), set up in 2006 to manage the countrys oil revenues has assets of around $70 billion (Dh257.46 billion), equivalent to nearly 75 per cent of the countrys economy. LIA, which is roughly the same size as Qatars sovereign wealth fund, publishes little information, but a rare annual report in 2009 shows how liquid the fund is.

According to a Wikileak document, the funds director, Mohammad Layas, has said that LIA has about $32 billion in liquidity. Many of its investments are carried out via London, but according to the leaked cable, some $500 million is also managed via US banks. LIA is also seen as the major vehicle for Gaddafi and his familys wealth and controls at least seven subsidiary operations.

There are also close ties to Italy: One prominent member of LIAs advisory board was Marco Tronchetti Provera, the chairman of Italys tyre giant Pirelli, who, however, resigned from the board on Wednesday.

Profile

LIA was established by the General Peoples Committee of Libya in 2006. It is a holding company that manages investment funds of the government coming from the oil and gas industry in various areas of the international finance market. It followed the Libyan Arab Foreign Bank, established in 1972 to support overseas investment, in addition to the Libyan Arab African Investment Company for investments in the African Continent. One activity of LIA is related to the Economic and Social Development Fund, which is meant to manage assets in Libya to benefit Libyas population. The African investment arm of LIA has reportedly placed several hundred million dollars of its assets with FM Capital Partners in London, created by a former Merrill Lynch and JPMorgan asset manager, according to Wikileaks.

The related Libya Africa Investment Portfolio, a fund created in 2006 with a capital of $8 billion, is holding stakes in national and foreign companies such as OiLibya, Afriqiyah Airways, Sahel-Saharan Investment and Trade Bank, LAP Green Network, a telecom investment vehicle, and Libyan African Portfolio SA, an investment firm based in Switzerland, according to data of the SWF Institute.

Between 2006 and 2009, records of the fund show that it made a profit of about $2.4 billion.