Saudi Arabia is sick of the big sovereign funds in China and Abu Dhabi kicking sand in its face. The country plans to put a fund in place that will "dwarf Abu Dhabi’s $900bn" fund according to the FT. That means it will almost certainly be larger than similar funds in Singapore and China.
Most of these governments have had the means to pool large amounts of their own capital to create investment and buy-out funds. Now they are seeing large parts of corporate America go "on sale". Most of the properties available are cheap because of poor management or the current financial crisis. But, the value of many of these companies is likely to rebound.
Sovereign money has recently gone into large corporations including AMD (AMD). Morgan Stanley (MS), and Citigroup (C). There are rumors that Singapore’s Temasek fund could put $5 billion into Merrill Lynch (MER).
The Saudis may start with a big transaction to prove that they are in the game to win. Bank of America (BAC), which is near its 52-week low and may have more mortgage problems could be a target. Other huge companies with big revenue and established businesses like Sprint (S) and GM (GM) could make it onto a list.
With hundreds of billions of dollars of willing capital coming into the market, almost any troubled US firm becomes a candidate.
"Buy American" takes on a whole new meaning.
Douglas A. McIntyre
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