The Oman Investment Authority (OIA) is planning US$5 billion of investments in 2023 alone, funded in part from divestment of eight assets, according to reports in the state media.
Predicting returns exceeding US$1.3 billion next year, the US$41.5 billion fund - representing 40% of Oman’s GDP - is also looking to raise debt and co-invest with local and foreign private partners.
The investments will include about 65 new and existing projects in logistics, food and fisheries, energy, mining, services, and communications and IT, say reports, while divestments will include three in the energy sector, three in aviation and tourism, and two in telecommunications and technology.
One of the key goals in its 2022-26 strategy is privatizing and/or floating 30 of the 160 government companies it currently holds. This is in line with its efforts to attract expertise, technology, and foreign investment to the country’s strategic sectors. A good example was the sale of 49% of Oman Electricity Holding Company (NAMA) to China State Grid in December 2019 for US$1 billion.
This week, OIA announced it had invested in US-based Group14 Technologies as part of a US$214 million Series C funding round. Group14 develops lithium-silicon battery materials and aims to replace the standard lithium-ion batteries, supplying SK Materials and Porsche. OIA is not simply looking at the venture capital deal in terms of financial returns, but is also intending the include Oman in the firm’s global supply chain. The deal follows OIA’s involvement in a Series C funding round for Ascend Elements, a US firm specializing in the recycling of lithium-ion batteries used in electric vehicles.
The deal forms part of a medium-term strategy to target strategic economic diversification at home and yield-generating investment abroad. Last month, the OIA announced the inauguration of 10 strategic projects across the country with a total value of more than OMR750 million (US$1.95 billion), in partnership with domestic and foreign investors. The projects are part of OIA’s National Development Portfolio, which manages more than 160 local assets and companies and represents more than two thirds of the total value according to Global SWF’s estimates. The other part of the fund’s portfolio is the Generational Portfolio, which consists of mostly foreign assets and will focus on “achieving the greatest returns for future generations” and is invested in public markets (69%) and private markets (31%) overseas.
The first project will be Sanvira Carbon, a joint venture between TANMIA, Sanvira Industries, and United Business Trading which targets the establishment of a petroleum coke calcining facility in the Sohar Freezone. The OMR60 million plant’s output will be used in the manufacturing of aluminium with more than 70% exported.
OIA’s subsidiaries are being deployed to forge partnerships in food security (Oman Food Investment Holding Company (NITAJ)), ammonia and oil production (OQ), water supply (Oman Water & Wastewater Services Company), ship fuelling (Oman Oil Marketing Company), desalination (Oman Power and Water Procurement Company (OPWP)), and hotels and tourism (Omran Group).
Partnerships with other Gulf SWFs play a central role in its economic diversification drive. In September, Abu Dhabi’s US$157 billion state-owned investor ADQ announced it was looking at opportunities in Oman worth over US$8 billion and bolstering bilateral economic and political relations, in partnership with OIA. Joint investment collaboration in low carbon electricity generation, utilities, and metal production were all sited as target areas by officials of both organizations during visit of Abu Dhabi leader and UAE President Sheikh Mohamed Bin Zayed to Oman. The Abu Dhabi fund signed an agreement with OIA subsidiary the Oman Information, Communication and Technology Group (ITHCA) to establish a US$160 million venture capital fund to invest in high-growth tech startups in Oman.
In October, the fund announced it was looking for deals in the UK, exploiting the slump in the value of pound sterling. On the sidelines of the Future Investment Initiative in Riyadh, OIA’s director of private equity Ibrahim al-Eisri told Bloomberg, “We see opportunities in Europe in different sectors especially in technology. UK has lots of opportunities due to the falling currency.”
According to its 2021 annual review, the fund has achieved an annual average return of 10.3% since its launch. The OIA was established in June 2020 through the merger of the Oman Investment Fund and the State General Reserve Fund. The SGRF was used largely as an oil revenue stabilization mechanism and to diversify the economy away from O&G, while the OIF on the other hand was the successor of the Oman Oil Fund and invested in long-and medium-term projects at home and abroad.
The fund has increased its exposure to the real estate sector, tech, mining, transportation and logistics, as well as liquid assets such as public equity and fixed income. Nearly 62% of the portfolio is in the Sultanate, with 17% in North America, 9% in Western Europe and 5% in Asia-Pacific.
