What is the Kuwait Investment Authority and what does it do?

Kuwait Investment Authority (KIA) is a government-owned business in Kuwait that manages the country's sovereign wealth fund. It was founded in 1982 as a spin-off of the Kuwait Investment Board to manage government funds drawn mostly from Kuwait's oil reserves' excess revenues. The fund, which is the world's first and oldest, was established to reduce the country's reliance on oil.

Key Points Briefly

  • Kuwait Investment Authority is a government-maintained company that administers Kuwait's self-governing wealth fund.

  • The objective of Kuwait Investment Authority (KIA) to manage official government money, which is mostly made up of revenues from oil rich areas.

  • There is diversification of funds and KIA always looks at both private and public listed equities. Apart from these, one of the biggest sources are real restate.

  • The General Reserve Fund and the Future Generations Fund are the two halves of it.

Kuwait Investment Authority – How did it begin?

Kuwait was established early on in 1938 as the authority of Crude Oil exporter when it became the first country to export Crude oil. It had become a well known name globally for shipment of crude oil by 1940s. The Oil rich reserves made sure that the economy kept growing at a rapid pace of the Middle east nation.

Looking to further its investment opportunities, it started Kuwait Investment Board after the independence in the year 1953.

The board was set-up to handle the profits from oil and petroleum products. They realized early on the need for investing in multiple areas and also spotted their reliance on just a single asset.

Kuwait Investment Authority (KIA) was established in 1982 as an autonomous government entity and was given the task of handling the country's assets.

This made it the oldest sovereign wealth fund in the world and has been led by a group of directors, that has Minister of Finance as Chairman. The strategy and decisions need to be approved by the group of directors. The board has complete autonomy and independency to make decisions. According to their report, it has managed $536 billion in holdings.

KIA's mission statement is made up of three different principles

  • Parts of the Future Generations Fund are being managed.

  • Outperforming the benchmark and preserving capital to achieve long-term returns.

  • Improving its image as a forward-thinking organization that invests in the global market

The fund is a member of the International Forum of Sovereign Wealth Funds and one of the first to sign the Santiago Principles, a set of 24 best practices for these kinds of funds.

The principles aim to encourage accountability and openness among the world's sovereign wealth funds, as well as smart investment decisions.