On Monday, the Qatari sovereign wealth fund, the Qatar Investment Authority (QIA), announced that it would subscribe to mandatory convertible bonds worth 2.4 billion euros from the German energy supplier RWE – and thus caused prices to rise. RWE shares have risen by almost five percent since the deal was announced by Tuesday afternoon. The capital injection should enable RWE to make an important investment in the future: the purchase of the US solar specialist Con Edison Clean Energy Businesses for a total of 6.9 billion euros.
The deal is intended to enable RWE to phase out coal-fired power generation earlier than planned, the company announced on Tuesday. For the Qatari royal family, on the other hand, the entry of its fund into what is probably the most important German supplier means an expansion of its own sphere of influence – after Qatar has already become the largest Arab investor in Germany with a whole series of investments worth well over 25 billion euros in recent years would have.
With assets totaling $445 billion, QIA was one of the ten largest sovereign wealth funds in the world. The investment vehicle was once fed with billions in surplus from energy sales. According to an insider, however, QIA has not received any fresh capital from the state since 2017: it is said that income is generated through the sale of investments and through dividends that are reinvested.
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Apparently with success. Because especially in Germany, the list of Qatari holdings has been getting longer since then: In addition to start-ups such as the vaccine manufacturer Curevac and the Berlin vertical farming start-up Infarm, there are also numerous traditional German groups such as Deutsche Bank (6.1 percent ) or the shipping company Hapag-Lloyd (12.3 percent).
Qatar and the Volkswagen Group
Most recently, the Qataris also made a name for themselves as a so-called “corner stone investor” in the IPO of the car manufacturer Porsche (4.9 percent) – the desert state has already been involved in the former parent company, Volkswagen (17 percent), via Qatar Holding for many years involved.
heavyweight
445
billion dollars
The Qatari sovereign wealth fund, the Qatar Investment Authority, owns fixed assets, making it one of the ten largest sovereign wealth funds in the world.
Qatar is also one of the most important shareholders in the Munich-based Siemens group via the QIA fund with a share package of currently around three percent – as well as in several spin-offs of the company, including the medical technology division Siemens Healthineers (less than one percent) and the joint venture Fluence, which Siemens founded in the USA together with the US utility AES.
Siemens managers describe the commitment as “silent participation”, so they perceive little influence on the business. Qatar, on the other hand, is an important market for the group: in the past, Siemens delivered trams and substations there, for example.
Industry experts explain the interest of the Qatari sovereign wealth fund in German industry with the long-term strategy of the royal family to make the country less dependent on fossil fuels. While a large part of government revenue still comes from the sale of oil and gas, decarbonization will make the business model increasingly unattractive in the coming decades. The state leadership is really concerned about what will happen to the country’s prosperity, said former Siemens boss Joe Kaeser recently in an ARD interview.
As an investor, Qatar also pursues political interests
The QIA itself explains its entry into RWE with industrial strategic interest. “We are proud to support RWE’s vision to become a leader in the global renewable energy market,” said QIA boss Mansoor Al-Mahmoud, according to a statement from the fund. “QIA actively invests in companies that can make a positive impact on society and shape the future of sustainability by making the energy transition a reality.”
“Even if Qatar is a welcome shareholder, you shouldn’t be blind in one eye.” Marc Tüngler, German Association for the Protection of Securities Ownership
A good expert on both the political leadership and the business world of Qatar, who does not wish to be named, also sees geostrategic motives. “Such investments also serve political relations. Qatar protects itself, secures protection from partners in the event of another crisis.” The country has repeatedly been criticized for human rights violations – for example the use of forced laborers to build stadiums that will be used at this year’s World Cup must.
Shareholder protectors therefore warn against assessing the commitment of the kingdom too euphorically. The managing director of the German Protection Association for Securities Ownership (DSW), Marc Tüngler, told the Handelsblatt: “Even if Qatar is a welcome shareholder, you shouldn’t be blind in one eye.” Social commitment and sustainability would always be important for the European economy more important. “The human rights violations discussed in Qatar are not at all compatible with a more sustainable corporate orientation.”
Even if the country has so far largely held back as an owner, Qatar has very clear interests, according to the shareholder protector – “its own ones at that”.
More: RWE will end lignite-fired power generation in 2030