Pharos to Get $1Bln From Gulf

Moscow-based hedge fund Pharos is planning to raise more than $1 billion from investors in Saudi Arabia, the United Arab Emirates and other Persian Gulf countries for its Russian funds.

"There is tremendous interest" in Russian equities in the region, Steve Kalnoky, business development manager at Pharos, which has about $150 million invested in Russia, said in a telephone interview from Dubai on Tuesday.

"One of our funds is a gas-sector fund, and even our blue-chip portfolio is very heavy with oil, which are things that are well understood in this region."

Gulf investors, flush with petrodollars from record oil prices, are seeking new investment opportunities. Buying into Russian stocks exposes them to an equity market that is twice the size of Saudi Arabia's, the Middle East's biggest.

The Russian economy is expected to grow 6.9 percent this year, according to the median estimate of analysts polled by Bloomberg.

Crude oil for April delivery traded at $102.74 per barrel in electronic trading on the New York Mercantile Exchange at 6:10 p.m. in Dubai. Crude climbed 71 percent in the past 12 months. Russia and Saudi Arabia vie for the position as the world's largest oil producer, while Saudi Arabia exports more crude.

The MSCI GCC Countries Index, a measure of more than 140 companies in six Gulf Arab states, surged 47 percent in 2007.

Saudi Arabia's Tadawul All Share Index jumped 41 percent last year, while the MICEX Index gained 12 percent during the same period.

Pharos, which was started over 11 years ago by fund manager Peter Halloran, may launch sharia-complaint funds to attract more Persian Gulf investors, Kalnoky said.

Muslim sharia law forbids investment in companies with high levels of debt or ones that are active in proscribed businesses like gaming and alcohol sales.