Libya's $70 bln Wealth Fund Sees Thaw in UN Asset Freeze by Year-end

Libya's Tripoli view - File photo/AAWSAT AR
Libya's Tripoli view - File photo/AAWSAT AR
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Libya's $70 bln Wealth Fund Sees Thaw in UN Asset Freeze by Year-end

Libya's Tripoli view - File photo/AAWSAT AR
Libya's Tripoli view - File photo/AAWSAT AR

The Libyan Investment Authority is expecting UN sign-off by the end of the year to actively manage its $70 billion in assets for the first time in more than a decade, its chief executive told Reuters.

The LIA, set up under Muammar Gaddafi in 2006 to manage the country's oil wealth, has been under a United Nations asset freeze since the 2011 revolution that toppled Gaddafi.

This means that in order for Africa's largest sovereign wealth fund to make new investments, or even move cash from negative interest rate accounts, where they have been losing money, the LIA needs UN Security Council sign-off.

Chief Executive Ali Mahmoud Mohamed said the authority is confident the council will provide the landmark approval by November or December for an investment plan it submitted in March.

"We believe our investment plan with be accepted ... we don't think they will refuse it," Mohamed told Reuters via a translator.

The first of LIA's four-part plan is the "very simple" step of reinvesting money that has built up during the freeze, such as payouts from bond holdings.

The LIA has previously tried to actively manage its funds. But in the turmoil following Gaddafi's ouster, it at one point had dueling chairmen, backed by different factions within the country. A British court ruled in 2020 in Mohamed's favor. In 2020, the LIA said a Deloitte audit showed the freeze had cost it some $4.1 billion in potential equity returns.

He said transparency has since improved; the LIA released audited financial statements in 2021, covering 2019. It aims to publish the 2020 numbers in the coming months and provide them annually from next year.

And while the LIA was 98th out of 100 sovereign funds in a 2020 ranking of sustainability and governance by Global SWF, an industry data specialist, it stood at 51st this year.

Of its estimated $70 billion in assets, the fund has $29 billion in global real estate, $23 billion in deposits invested in Europe and Bahrain and $8 billion in equities spread over more than 300 companies around the world. It also has roughly $2 billion worth of matured bonds.

The UN Security Council Committee was not immediately available to comment. Last year, after meeting with the LIA, its members "noted the progress made on the implementation of the LIA's Transformation Strategy" and stressed "the importance of guaranteeing the frozen funds for the benefit of the Libyan people."

Mohamed said that it is also planning to request approval this year for two further investment plan "pillars" - one that covers its share portfolio and another that relates to domestic investment plan.

The LIA is targeting domestic investments in solar power and helping increase oil exports. Libya is one of Africa's largest oil exporters, pumping roughly 1.2 million barrels per day.

If the UN does not approve its investment proposals, Mohamed said "we will keep trying...we will keep asking and requesting."



Petrochemical Recovery Boosts Saudi SABIC’s Profits by 84.7%

SABIC’s technical center in Shanghai, China (company website)
SABIC’s technical center in Shanghai, China (company website)
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Petrochemical Recovery Boosts Saudi SABIC’s Profits by 84.7%

SABIC’s technical center in Shanghai, China (company website)
SABIC’s technical center in Shanghai, China (company website)

Saudi Basic Industries Corp (SABIC), one of the world’s biggest petrochemical companies, beat analysts’ forecasts in the second quarter, indicating a recovery in the petrochemical sector.
SABIC, 70% owned by Aramco, posted a profit of SAR 2.18 billion ($581 million), significantly higher than the expected SAR 859.5 million. This represents an 84.7% jump from the previous year.
The company attributed the rise to better product margins and reiterated its commitment to improving its strategic portfolio and restructuring weak assets.
The global petrochemical industry is recovering after a tough 2023, characterized by slow demand growth and overproduction.
SABIC credited its growth to a 32% rise in gross profit to SAR 1.76 billion ($469 million), due to better margins on key products, though higher operating expenses from one-off charges partly offset this.
Additionally, reversing a Zakat provision resulted in non-cash gains of SAR 545 million in Q2, up from SAR 440 million in the same period in 2023, due to recent regulatory updates.

Global trade showed signs of recovery, driven by higher exports, inventory restocking and increased financial activities, said SABIC CEO Abdulrahman Al-Fageeh.
As inflationary pressures ease some central banks have begun reducing interest rates, potentially providing additional stimulus to the global economy, he added.
Mohammed Al-Farraj, Senior Asset Management Director at Arbah Capital, stated that improved profit margins boosted SABIC’s earnings despite higher operating expenses in Q2.
Speaking to Asharq Al-Awsat, Al-Farraj highlighted potential future challenges for SABIC, including price volatility, as its profits depend heavily on fluctuating raw material and product prices.
He also mentioned intense competition in the petrochemical industry and changes in the global economy.
Al-Farraj added that anticipated interest rate cuts by the US Federal Reserve could further grow SABIC’s profits in the second half of the year by reducing borrowing costs and encouraging investment in new projects and expansion.
Former senior advisor to the Saudi Energy Minister, Dr. Mohammed Al-Sabban, predicted a recovery in the petrochemical sector, driven by increased demand from Asian countries, especially China.
He noted that despite current economic fluctuations in China, government efforts to avoid a recession are expected to succeed by the fourth quarter, with a more significant recovery in 2025.
Al-Sabban told Asharq Al-Awsat that the recovery will be supported by other developing countries, leading to gradual price increases, benefiting Saudi petrochemical companies. He expressed optimism about continued sector growth in the coming phase.