Libyan Investment Authority announces its Strategic Plans

The Libyan Investment Authority (LIA) embarked during 2012 on the implementation of an ambitious program to strengthen LIA and position it as a sovereign wealth fund of international standing, capable of achieving its goal of securing earnings for future Libyan generations over and above earnings from oil & gas. Under the new Board of Directors formed in mid-2013, it was decided that this process of restructuring LIA and of valuing its assets, committed to under the leadership of the previous Board, should be continued.

Since the Chairman of LIA assumed his position on the 3rd of June 2013, he has been working with the Board of Trustees, Board of Directors and senior management and international consultants to restructure LIA, value its assets and develop a new strategy. LIA selected Oliver Wyman, an international management consultancy firm, to work with to establish a clear picture of the current state of the institution and to develop and support the implementation of the new strategy. Deloitte, a global professional services firm, was selected in relation to valuing LIA’s assets.

The Libyan Investment Authority is entrusted to protect and grow the wealth of the Libyan people for future generations. This is a critical role for the future of our country and it demands that we strive towards creating institutional excellence and achieving international best practices in governance and transparency in rebuilding and managing LIA.

At the head of LIA’s governance structure is its Board of Trustees, comprising of the Prime Minister, Governor of the Central Bank of Libya, the Ministers of Finance, Planning and Economy, as well as two independent members with expertise in international investment. The Board of Trustees is considered a supervisory body acting as the general assembly for LIA.

LIA’s Board of Directors is made up of seven non-permanent members. The position of CEO is currently vacant, and the Board of Directors has taken the decision to develop a role description and skills profile for this position and to advertise this position in the local media and internationally, such that all appropriately qualified Libyans will have the opportunity to apply.

LIA’s assets stood at approximately US$60 billion as of 31/12/2013, some of which remain frozen by international resolutions, and of which approximately 50% are investments in funds and portfolios belonging to the Libyan Foreign Investment Company (LAFICO), the Libyan African Investment Portfolio (LAP), the Long Term Portfolio (LTP), the Oilinvest Group and the Libyan Local Investment & Development Fund (LLIDF). The remaining assets are held as investments in cash, fixed income and equities internationally and as bank deposits. It should be noted that all of these assets are under the control of the institution and registered in its name. The company responsible for valuation has so far valued approximately 70% of these assets and the valuation process is expected to be completed within two months.

The former regime left behind many challenges in its wake. LIA is resolved to address these challenges, and following a study conducted alongside international management consultants to establish a clear picture of the current state of the institution and to develop a new strategy for the future, we have embarked on a short to medium term transformation program to strengthen LIA and to enhance its corporate governance in accordance with best practices, enabling us to invest wisely for the future.

Given the requirements of the new strategy of the Libyan Investment Authority, it will need to be supported by appropriate legislation. Work is currently under way to review Law 13 of 2010, which underpins and regulates the operations of LIA, in order to enshrine the new strategy in law. The draft law shall be discussed by the Board of Directors and Board of Trustees of the Libyan Investment Authority and will then be presented to the General National Congress via the Council of Ministers for discussion and enactment.

In line with the proposed new structure of LIA, all new investment activities will take place via specific funds, each with a clear purpose that will guide each fund’s governance, strategy and investment approach, in order to more efficiently manage wealth for future generations and effectively contribute to the sustainable development and diversification of sources of income. The funds currently envisaged are:

  • Further to the revisions proposed to Law 13, we recommend the establishment, in the near term, of a Future Generations Fund that will be seeded by liquid assets currently held by LIA and that will receive a fixed annual share of Libya’s oil proceeds to protect and grow it
    for future generations. Once the Fund is established, it will only invest internationally and outside the oil & gas sector, taking a sustainable, long-term view that is independent of political cycles. Investments will not be made directly but only through best-in-class international fund managers, as identified by leading investment consultants and recommended to the Investment Committee for subsequent approval by the Board of Directors and Board of Trustees. LIA’s investment approach will no longer be based on the decisions of individuals as was the case in the past.
  • The Libyan Local Investment & Development Fund will develop and diversify Libya’s non-oil economy by investing in and supporting major projects which impact Libyans directly and support growth across all of Libya, in addition to working to ensure these contribute to the sustainable development of our new society. The fund will provide an appropriate environment for the growth and participation of the private sector, bringing in foreign expertise and technology through the use of public-private partnerships. Regarding LIA’s current subsidiaries and their holdings, these will be addressed within the framework of the strategy. Performing assets will be managed for growth and improvement, while non-performing assets with no economic viability will be either sold or liquidated.
  • Finally, we hope that we have given you an initial picture of our future vision for LIA and its affiliates. We will be communicating with you regularly on future developments, in line with our goal of enhancing transparency and given the right of all to have access to accurate, original information from the source regarding LIA.