What Is the Investment Authority of Kuwait?

The government-owned company overseeing Kuwait’s sovereign wealth fund is the Kuwait Investment Authority (KIA). It was created in 1982 to oversee government revenue, mainly obtained from Kuwait’s excess earnings from its oil reserves. The Kuwait Investment Board served as its predecessor. The fund was established to reduce the nation’s reliance on oil. It is the first and oldest fund in the world.

Having Knowledge of the Kuwait Investment Authority

Kuwait was the first place where crude oil was found in 1938. Kuwait became known as one of the world’s leading crude oil producers when it shipped its first commodity shipment out of the nation in 1946. As a result, the nation’s economy expanded, and its officials began looking for ways to spend their extra money.

Nine years before Kuwait’s independence, in 953, Sheikh Abdullah Al-Salem Al-Sabah established the Kuwait Investment Board. The board’s purpose is to oversee the country’s excess oil earnings. Another goal was to decrease Kuwait’s reliance on a single resource. This cleared the way for establishing the Kuwait Investment Authority (KIA), an independent government organization tasked with overseeing the nation’s assets, in 1982. With additional offices in Shanghai and London, the KIA is based in Kuwait City.

Overseen by a board of directors, the KIA established the first and oldest sovereign wealth fund in history. The power and autonomy over the fund’s asset allocation plan rest with this board. It is also in charge of the fund’s operation. The fund’s primary investing categories are real estate, fixed income, alternative investments, and private and public equities. The Sovereign Wealth Fund Institute claims the KIA is worth $750 billion in total assets.

The KIA’s mission statement is composed of three main principles:

• Overseeing specific areas of the Future Generations Fund, beating the benchmark to preserve capital and generate long-term returns.
• Enhancing its standing as a forward-thinking organization that makes global market investments

This fund is among those that have ratified the Santiago Principles, a set of 24 industry best practices, and is a member of the International Forum of Sovereign Wealth Funds. The world’s sovereign wealth funds are encouraged to make wise investment choices and to be held accountable and transparent.

Extra Attention to Detail

The Future Generations Fund (FGF) and the General Reserve Fund (GRF) are the two divisions of the fund. The GRF holds the nation’s oil revenues and any income derived from the fund’s assets. The national government may use its resources and income as it pleases. In addition to domestic businesses, this category also makes investments in businesses in neighboring Middle Eastern and Northern African nations.10% of the nation’s revenue and, if there is an excess, 10% of the GRF’s net income are transferred to the Future Generations Fund with approval from the Minister.

The FGF is considered an intergenerational platform for long-term savings. A 50% transfer from the GRF was used to develop this sector, established in 1976. The fund strategically allocates its assets to investments made outside of Kuwait. All of FGF’s investment revenue is reinvested. A particular law is needed for any transfers from the fund.

Conclusion

• The Kuwait Investment Authority is a government-owned company in charge of Kuwait’s national wealth fund.
• As a result of Kuwait’s oil riches, the government gets most of its money from the KIA.
• The fund puts its money into real estate, fixed income, private and public stock, and other investments.
• The General Reserve Fund and the Future Generations Fund are the two parts that make it up.