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Libya’s Billions in Search of Projects

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image Libya's Investment Instruments

Libya is moving fast to catch up with oil-rich Gulf nations that have set up lucrative investment funds to acquire assets around the world. However, Libya’s entry into the global investment community is not new. Its first and probably most known fund, the Libyan Arab Foreign Investment Company (Lafico) was already set up some 28 years ago.

Today the country has six such investment instruments. They are the Libyan Investment Authority, the Economic & Social Development Fund, the Social Security Investments Fund, the Libya Africa Investment Portfolio, the Libyan African Investments Company, and the Libyan Foreign Investments Company.

But what makes this industry interesting is the fact half of these funds were set up after 2005, as an effort for Libya to channel its oil revenue into foreign markets. The latest such funds are the Libya Africa Investment Portfolio, which has a capital of $8 billion but is headquartered in Switzerland. The Economic and Social Development Fund was established to manage the money allocated by the central authorities to the Libyan people within Kaddafi sponsored oil revenue sharing program. Finally the Libyan Investment Authority (LIA) is a holding that supervises and oversees all investment funds and controls between 50% and 75% of the $135 billion managed by the nation’s funds. The fund is getting bigger each year since Libya’s policy to automatically channel a portion of the country’s oil revenues. For a small country like Libya, one would thing the investment fund sector is saturated. Not for the Libyans. Today, Investment Authority and the Central Bank are teaming up to set up yet another fund.

With a growing clout and expanding resources, it is no surprise that the Libyans are getting a lot of attention from those seeking money, and the French are the first ones knocking at the door. The French business development agency Ubifrance, acting on behalf of French corporation has been rather proactive courting the Libyan fund managers. On June 15, 2009 it organized a forum to enable meetings between the Libyans and French executives.

The Libyans are establishing these funds apparently to avoid a piling up of foreign currency reserves above and beyond a reasonable level to manage inflation and erratic currency exchange fluctuations. Instead, they are now keen on spending their money in joint projects and equity acquisition. Many key projects in Europe, Africa, Latin American and even Libya have already been finalized and others in their final planning phases. For instance, the Libyan African Investments Company has recently purchased the Tunisian hotel chain Abou Nawas and is now looking partners to build another luxury hotel in Tripoli and another partner to operate two gold mines in Eritrea. In neighboring Tunisia, the Libyan Arab Foreign Investment Company has been active there since its inception in 1981 with it acquired equity in the Tourgueness Corporation, now a majority owner.

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