Kuwait Investment Authority Definition

What is the Kuwait Investment Authority?

The term Kuwait Investment Authority (KIA) refers to a state-owned company responsible for managing the sovereign wealth fund from Kuwait. Founded by the Kuwait Investment Board in 1982, it was created to manage the government revenuemainly from the surplus product that Kuwait derives from its oil reserves. The fund, the first and oldest in the world, was created to reduce the country’s dependence on oil.

Key points to remember

  • The Kuwait Investment Authority is a state-owned company that manages Kuwait’s sovereign wealth fund.
  • The KIA was established to manage government revenue, which consists mainly of profits from Kuwait’s oil reserves.
  • The fund invests in private and public equities, real estate, fixed income securities and alternative investment markets.
  • It is divided into two segments: the General Reserve Fund and the Future Generations Fund.

Understanding the Kuwait Investment Authority

Crude oil was first discovered in Kuwait in 1938. The country exported its first shipment of commodity in 1946, which put Kuwait on the map as one of the world’s leading producers of crude oil. This stimulated the economyleading its leaders to look for ways to invest its excess income.

Sheikh Abdullah Al-Salem Al-Sabah established the Kuwait Investment Board in 1953, eight years before the country’s independence. The council was created to manage the country’s investments. surplus oil revenues. It also aimed to reduce Kuwait’s reliance on a single resource. This paved the way for the establishment of the Kuwait Investment Authority (KIA) in 1982 as an autonomous government body to manage the assets of the country. The KIA is located in Kuwait, with additional offices in London and Shanghai.

Interested in investing in Kuwait? Consider a mutual fund or an exchange-traded fund.

The KIA, which created the very first and oldest sovereign wealth fund in the world, is managed by a board of directors. This board has authority and independence over the activities of the fund asset allocation strategy. He is also responsible for the performance of the fund. The fund invests primarily in private and public capitalimmovable, fixed income, and alternative investment markets. According to the Sovereign Wealth Fund Institute, the KIA has a total of $533.6 billion in assets.

There are three different principles that make up the KIA mission statement:

  • Management of certain parts of the Future Generations Fund
  • Conservation Capital city and achieve long term Return by surpassing the reference
  • Promote its reputation as a progressive institution that invests in the international market

The fund is one of the members of the International Forum of Sovereign Wealth Funds and is among those that have joined the Santiago Principlescomposed of 24 best practices for these types of funds. The principles aim to promote responsibility and transparencyas well as sound investment decisions among the world’s sovereign wealth funds.

Special Considerations

The fund is divided into two segments: the General Reserve Fund (GRF) and the Future Generations Fund (FGF). The country’s oil revenues and any income derived from the fund’s investments are held in the GRF. Its assets and income may be freely used by the national government. This segment invests in domestic companies, as well as companies in other countries in the Middle East and North Africa. Up to 10% of country revenue and 10% of GRF revenue net revenue are transferred to the Future Generations Fund.

The FGF is considered a long-term intergenerational savings platform. This segment, created in 1976, was created with 50% to transfer of the GRF. The fund invests outside of Kuwait with a strategic asset allocation. All income from FGF investments is reinvested. Any transfer from the fund requires specific legislation.

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