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Hedge fund Passport Capital betting $230m on MENA region

Thursday, June 09, 2011
Opalesque Industry Update – John Burbank, the Founder of San Francisco-based hedge fund firm Passport Capital LLC is betting an estimated $231m or about 11% of the assets of his company’s $2.1bn flagship fund Global Strategy, into new Saudi portfolios. Burbank is particularly interested in publicly-traded petrochemical companies, banks, construction firms, and even health-care providers.

According to a Bloomberg report, Burbank is actually seeing huge potentials from the current political turmoil in the Middle East and North Africa, as well as the dip in the prices of oil, metals, and other raw materials.

In his assessment, Burbank is confident the ongoing political upheaval in the Middle East and North Africa will not spread to Saudi Arabia and that the monarchy’s reign is well positioned to survive negative criticisms over its decision to aid Bahrain in quelling an uprising, and its support of rebels causes in Libya and Syria.

He was quoted as saying, “The crisis isn’t affecting the long-term reality that this is where the oil is. We want exposure to the Saudi economy because the prices are very cheap and there’s going to be a lot of growth and higher returns on capital, and that’s something that’s likely to play out over a number of years.”

According to the 47-year-old hedge fund manager, oil prices will stabilize and the decision of the Saudi Kingdom to open its economy to foreign investors, make it “the time to plow into the country’s petroleum-rich economy.”

Looking ahead, Burbank is still confident that emerging economies will be the global growth driver. He said that as the emerging markets continue to develop its economies, there is a huge opportunity that little-known raw material producers will be converted into “money machines” in the future.

- Komfie Manalo

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