DEFINITION of Kuwait Investment Authority
The Kuwait Investment Authority (KIA) is a government-owned corporation responsible for managing the sovereign wealth fund of Kuwait. The KIA was initially created in 1953 to create a fund for future use and lessen the country's dependence on its oil reserves. The source of the money for the sovereign wealth fund is derived primarily from the excess proceeds from Kuwait's oil reserves.
BREAKING DOWN Kuwait Investment Authority
The Kuwait Sovereign Authority (KIA) manages the world’s oldest sovereign wealth fund. The Kuwait Investment Board was created in 1953 by Sheikh Abdullah Al-Salem Al-Sabah, eight years before the country’s independence in 1961. The Kuwait Investment Authority was created in 1982 as an autonomous government body in charge of managing the assets of the country. It is located in Kuwait City, Kuwait, with additional offices in London, England and Beijing, China.
The KIA invests mostly in private and public equity, real estate, fixed income and alternative investment markets. The fund is divided into the General Reserve Fund and the Future Generations Fund. According to the Sovereign Wealth Fund Institute, the Kuwait Investment Authority controls the seventh-largest sovereign wealth fund in the world.
The General Reserve Fund (GRF)
Kuwait’s GRF is the primary repository of the country’s oil revenues and income earned from the fund’s investments. Its assets and income are open to use by the State of Kuwait as determined by the government. Ten percent of all state revenues and 10 percent of the GRF’s net income are transferred to the Future Generations Fund. The GRF invests in companies in Kuwait and other MENA (Middle East and North Africa) countries.
The Future Generations Fund (FGF)
The FGF is considered an intergenerational, long-term saving platform. It was created in 1976 with a 50% transfer from the GRF. The fund invests outside of Kuwait with strategic asset allocation. All income from FGF’s investments are reinvested and any transfers from the fund require a specific legislation.