Baku: Azerbaijan’s $34 billion state oil fund plans to spend about $1 billion on real estate abroad this year, mainly in Asia and Australia, as it further diversifies a broad portfolio of foreign assets.
The state oil fund uses investment proceeds to help finance social spending and infrastructure projects. It transferred 7.04 billion manats ($9 billion) to the Azeri state budget in the first nine months of last year.
The fund spent $600 million on real estate in Europe in 2012, buying office blocks in central London and Paris and a shopping complex in Moscow. “We are more interested in Asia now, and we may invest about $1 billion in buying commercial property in this region in 2013,” Shakhmar Movsumov said.
As for countries of interest, he named Singapore, China, Japan, South Korea and Australia, which he said has “the same growth speed as countries in Asia and a European transparent institutional environment for commercial operations”.
The fund rents its foreign property for the long term and chooses A-class buildings, which are less vulnerable to price fluctuations and bring a stable income.
He added the fund would keep buying gold abroad and planned to purchase another 12 tonnes, increasing its reserve to 30 tonnes from a current 18 tonnes. The fund’s gold is held in JP Morgan storage facilities in London. Movsumov said the fund, which expects revenue of 11.8 billion manats this year, would invest more than $1.5 billion, together with state energy company Socar, to finance energy projects.
The projects include construction of a refinery in Turkey, a drilling rig on the Caspian Sea and the $8 billion Trans-Anatolian natural gas pipeline project (TANAP) to take Azeri gas to Turkey and to markets in Europe. “The oil fund will finance the state’s share in these projects and will be getting dividends, while the other part will be financed by SOCAR,” Movsumov said.
He said the Azeri state fund has started to invest in funds run by the International Finance Corporation (IFC), including $100 million in the IFC fund in Africa and Latin America (ALAC), $50 million in its climate fund and $150-$200 million in the Global Infrastructure Fund.