Twenty years ago, when I ran the Hong Kong branch of a London investment bank, one of our most important London-based investor clients for Asian stocks was only ever referred to, in whispers, as ‘Orange’. It operated — so I was told — behind unmarked doors somewhere near St Paul’s Tube station; it dealt with us only on condition of absolute secrecy; and it had nothing to do with Orange mobile phones, which had yet to be invented.
I think enough water has flowed under City bridges since those days to permit me to reveal Orange’s identity without embarrassing anyone — the investment bank and its Hong Kong branch having expired long ago. Our mystery client was the Kuwait Investment Office, which can claim, having been founded in 1953, to be the world’s oldest example of what the British media habitually paints as a new and frightening force in the financial world: the sovereign wealth fund. The KIO’s parent authority has been the recipient over many years of some 10 per cent of the emirate’s oil revenues; at an estimated $250 billion — making it the fifth largest such fund in the world behind those of Abu Dhabi, Norway, Singapore and Saudi Arabia, and just ahead of China — it looks after $80,000 of savings for every Kuwaiti.
I’ve no doubt that Orange, as I still like to think of it, still prefers to conduct its dealings in secret — not least to avoid market gossip about who it deals with and what it deals in, lest any of the answers are Islamically incorrect. But sovereign funds’ activities are much more in the public domain than they used to be. We know that the Abu Dhabi Investment Authority (the undisputed daddy, with an estimated $900 billion under management) is now the biggest shareholder in the US banking giant Citigroup, having filled a hole caused by subprime losses.
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