Watch Out For This Dangerous New Type Of Activist Investor


Photo: L Johnson / FLickr

One of the year’s most fascinating corporate sagas is about to come to an end. Xstrata’s shareholders were scheduled to vote today on a proposed merger with Glencore, which could create an $86 billion commodities giant. 

Qatar Holding, a division of the gas rich country’s sovereign wealth fund, has managed to force Glencore to increase its offer.

Qatar has built up a 12 per cent stake in Xstrata. They were not satisfied with the terms of Glencore’s initial offer, and stood firm

Qatar Holding is a unique and unprecedented type of investor. They’re not accountable to shareholders, clients, or anybody but their government.

Other sovereign wealth funds have tended to be passive shareholders, so as to avoid the accusation that they were pursuing foreign policy goals with their investments.

Foreign policy is not part of the calculation here, Qatar just wants an improved deal. However, the fund’s cash reserves and the country’s wealth are such that they can watch the deal fall through with no ill effects, and ignore the consequences for the two companies. 

Given the fund’s ever increasing investments throughout the world, future dealmakers will ignore them at their peril. 

See also: Here’s What’s Led To Explosive Growth For Chinese And Indian Entrepreneurs

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