Illinois-based hedge fund firm Global Capital Investments has launched a new fund that will primarily invest in shares listed on the Iraq Stock Exchange. The vehicle, the Iraq Fund L.P., may also invest up to 20% of its assets in private, less liquid, early-stage projects that focus on Iraq’s infrastructure and natural resources sectors.
Abraham Merchant and Kenneth Kuhn, managing directors of Global Capital Investments, say recent trends in Iraq make the petroleum-rich country a compelling investment opportunity.
“As Iraq’s economy transitions, it is in the process of adopting legal and regulatory reforms that will make its financial markets more attractive to outside investors,” says Merchant, pointing out that interest rates have fallen from 20% to 6% annually, exports have risen, the dinar is stabilizing, and the country has minimal national debt.
“The quality of corporate profits is rising and there’s economic and market support from the U.S. and internationally,” adds Kuhn, citing $3.6 billion economic aid package awarded to Iraq by the IMF in February 2010 and the $250 million package from the World Bank.
"Only a fraction of Iraq's known fields are in development while 80% of the country remains unexplored. As redevelopment progresses, it will further strengthen the overall economy for the Iraqi people," says Kuhn.
According to the firm, the objective of the new fund is to seek long-term capital appreciation.