Kuwait Sovereign Fund May Boost its Stakes in Citi and Merrill

Kuwait Sovereign Fund May Boost its Stakes in Citi and Merrill


May 1 (Bloomberg) -- Kuwait's $250 billion sovereign wealth fund may boost its stakes in Citigroup Inc. and Merrill Lynch & Co. as it pursues investments in U.S. and European companies battered by subprime-mortgage related losses.

``The valuation in the markets in the U.S. and Europe, we think, has created a lot of opportunities,'' Bader al-Saad, the Kuwait Investment Authority's managing director, said in an interview with Bloomberg Television today. ``We have confidence in the management'' of Citigroup and Merrill, he said.

The KIA in January bought a $3 billion stake in Citigroup and invested $2 billion in Merrill to help replenish capital at the companies after they suffered writedowns on mortgages, bonds and loans. Banks and securities firms have absorbed more than $300 billion of losses since the collapse of the subprime- mortgage crisis set off a global credit crisis.

Al-Saad said his fund also purchased a 5 percent stake in Related Cos., a closely held residential property developer based in New York. The KIA moved away from a strategy of pursuing investments in developing nations last year to focus on financial and real estate companies in the U.S. and Europe, al- Saad said.

Citigroup, the biggest U.S. bank by assets, sold $4.5 billion of stock this week after reporting its second straight quarterly loss. The New York-based company has recorded more than $40 billion of credit losses and writedowns since last year.

The share sale ``will strengthen their capital base, which is very important.'' al-Saad said. ``I hope it's enough.''

BLOOMBERG