07 Oct A secretive investment agency with a difference
The Brunei Investment Agency (BIA), founded in 1983, is a government-owned investment organisation that holds and manages Brunei’s general reserve fund and its external assets. As with most sovereign wealth funds, it was created to control Brunei’s general reserve funds, grow its external holdings, diversify its revenue base, and hedge export revenues from energy and commodity price volatility.
Brunei is an oil-rich country and a huge exporter of energy resources: oil and gas account for almost 90% of the country’s exports, and 90% of government revenue. Hence, the funds deposited with the BIA are primarily surplus revenues from Brunei’s oil exports in the form of foreign reserves, which the agency manages via a sovereign wealth fund. In 2018, the BIA had approximately US$170BN in assets under management, according to the US state department.
BIA also functions primarily as the central bank in the country and another objective is to accumulate savings for future generations, as energy resources are considered depleting assets that shrink to zero over time. But because there is effectively no regulatory framework in this small nation, there is little public information about the BIA’s governance, assets, investment strategy, or its long-term objectives for the country. Moreover, the agency is highly secretive. Despite the agency’s opacity, it is known that apart from investments within Brunei, its portfolio contains diverse holdings in bonds, equities, currency, gold, and real estate; and that it has substantial investments in the United States.
In 1985, Brunei investors purchased The Dorchester hotel, on Park Lane, in London for US$50M. In 1996, BIA formed “Dorchester Collection,” a conglomerate of luxury hotels in the UK, US, France, and Italy whose nucleus is The Dorchester. BIA also owns The Beverly Hills Hotel in Los Angeles, which the agency purchased in 1987 for US$185M. Other real estate holdings include the Grand Hyatt Singapore. In June 2018, BIA acquired 6.6% of London-listed Draper Esprit PLC, a private equity and venture capital firm, for £20M.