Kuwait's sovereign wealth fund has made a $1.1bn profit by selling its entire stake in US bank Citigroup, cashing in on a recent revival in financial shares.
The Kuwait Investment Authority (KIA) invested $3bn in Citigroup in January 2008, as part of the global bailout of banks hit by huge writedowns on US mortgages, bonds and loans as a result of the sub-prime crisis. The Gulf fund also invested $2bn in Merrill Lynch before its takeover by Bank of America (BoA), and had been heavily criticised by some of the country's parliamentarians when bank shares continued to slump.
In September 2008, at the time when Lehman Brothers collapsed, the KIA admitted it was sitting on a $270m loss on its Citigroup stake.
But the recovery has prompted the fund to convert its preference shares into ordinary shares and sell them for $4.1bn, making a 37% return on its original investment. It gave no details on when the sale took place.
Aside from any forced disposals, which may result from the present problems in debt-laden Dubai, a number of Gulf investors have been selling some of their foreign investments. In recent months, Qatar has sold half its preference shares in Volkswagen for EUR1.5bn, as well as a GBP1.3bn stake in Barclays bank.