Qatar Holdings, which manages strategic and direct investments by the State of Qatar, is talking to banks about a $6-$7 billion (Dh22bn-Dh25.6bn) loan linked to its possible investment in Porsche.
Porsche has been talking to Qatar about a deal that would give the Gulf state a 20 per cent stake in Volkswagen via derivative contracts as it struggles to cement a merger with Volkswagen.
Porsche is holding a board meeting to determine a potential investment by Qatar and whether it could purchase voting shares, said people familiar with the ongoing situation.
Qatar Holdings is talking to five or six banks about the loan, which is being raised for "general corporate purposes" and could have recourse to the State of Qatar, said a banker.
Three other bankers close to the deal said they are working on loan structures that are directly linked to the acquisition of Porsche shares.
"Qatar Holdings is seeking to monetise the value in Porsche shares and borrow against their value. Are they planning to buy Porsche shares? Yes absolutely, but how and when they are keeping to themselves," said the banker close to the deal.
Privately-owned Qatar Holdings started talking to banks about the loan about two weeks ago on a one-to-one basis and is currently considering the feedback received, four bankers said.
Banks initially raised concerns over the lack of detail around the purpose of the borrowing and the legal status of Qatar Holding, which is a private entity although its shares are 100 per cent owned by parent Qatar Investment Authority which has full sovereign status.
The $10 billion Saudi debt restructuring for Saad Group and Algosaibi has hit confidence in lending to privately-owned Gulf companies and highlighted the need for precise loan documentation and legal recourse provisions.
"Qatar Holding is a private entity that happens to be 100 per cent owned by a fully sovereign name," said a senior banker.
Banks' concerns could be resolved by Qatar offering full recourse, or the loan could be secured on Qatar Holding's investments, said bankers.
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