Qatar moves into groceries...

Delta 2, which is an investment vehicle owned by the Qatari Royal Family and not a futuristic space ship, has bought a 17.4% stake in UK supermarket giant Sainsbury’s. This almost equals the 18% held by the Sainsbury family itself, who must be feeling rather miffed.

So is the Qatar Royal family interested in moving out of oil and into the grocery business? In actual fact, they are more interested in the huge property value locked up in the supermarket giant. While the company trades on a share many multiples of it profits, its property portfolio is thought to be worth billions.

By buying such a large share of the company, Delta 2, along with other shareholders, can pressurise the company into selling and leasing back its property portfolio. In the process it will raise billions of pounds of cash which it can return to shareholders such as Delta 2, and make Qatar even richer. This is, of course, necessary – as this post by Witisnswk points out, Qatar is worryingly lacking in billionaires.

In the meantime, it would be nice if its adventures into the grocery business would lead it to invite some of the British supermarket chains to set up in Qatar. At the moment, Carrefour is the only major international supermarket chain in Qatar. Carrefour is rather lacking compared to competitive British supermarkets – they have not even managed to work out how to weigh vegetables at the counter, necessitating long weights in the vegetable sections while a member of staff frantically weighs, bags and tags customers’ purchases.

Qatar is very sensibly pouring large chunks of its oil and gas money into investments abroad. It hopes, in ten years time, to be able to function independently of oil and gas revenues. Given the way things are going, it may also soon be able to build that futuristic space ship...

Also see:

Qatari group admits Sainsbury's stake (Yahoo!Finance)

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Qatar Doha Middle East finance Delta 2 sainsbury's