The “new global wealth machine” and its universities

Further to our most recent entry on the King Abdullah University of Science & Technology (KAUST), the Financial Times notes, today, that KAUST’s endowment could swell to a level that would make it the world’s second largest endowment (after Harvard), and it has not even finished building its first building!

As the FT suggests, this is setting off a scramble in the fund management world:

The King Abdullah University of Science & Technology will not open until 2009 but it is already holding talks on its endowment with fund managers such as BlackRock and private equity firms including Bain Capital, people familiar with the matter say.

The university has received $10bn for its endowment from King Abdullah, which would make it the sixth biggest university endowment in the world, said a university spokesman based in Washington.

People familiar with the endowment negotiations say they have been told the fund could grow to as much as $25bn, which would make it the world’s second biggest university endowment after Harvard’s $35bn nest egg.

The endowment would be one of several significant Saudi investment bodies. So far, the Saudi approach has been to refrain from giving any one arm too much money in the hope of maintaining a low profile and preventing a foreign backlash, bankers say.

“The Saudis under-represent both the amount of their reserves and the investments they make overseas,” said the head of the Dubai branch of one large Wall Street firm. “The last thing the Saudis want is to attract attention.”

Noteworthy, of course, was the visit by US President George W. Bush to Saudi Arabia last week, where he pleaded with the same King Abdullah to open the spigots a little wider.

News items like this are reminders that some of the so-called ‘hotspots‘ in the global higher ed world are linked, in quite fascinating ways, to the people controlling political regimes in countries like Saudi Arabia, the UAE, and Singapore.

On this note, the New York Times graphic below, which was recently profiled by the Center for Graphic Facilitation, hints at the fact that several of the key people behind Singapore’s Global Schoolhouse development initiative (which we will be writing about in the next 1-2 weeks) are also managing the Government of Singapore’s Government Investment Corporation (GIC), a sovereign wealth fund worth at least $330 billion.

As the same FT article notes:

Money from endowments is considered particularly desirable by fund managers because universities have such a long-term investment focus. Some sovereign funds in the Gulf, such as the Kuwait Investment Authority, have adopted the endowments of leading universities such as Harvard and Yale as their role models.

The new political economy of such development initiatives is complicated in nature, yet prising key elements of them apart is a challenging and entirely worthwhile task.

Kris Olds

3 thoughts on “The “new global wealth machine” and its universities

  1. Pingback: Analysing Australia’s global higher ed export industry « GlobalHigherEd

  2. Pingback: Euro-angsts, insights and actions regarding global university ranking schemes « GlobalHigherEd

  3. Pingback: Searching for KAUST: of salaries and future insights « GlobalHigherEd

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