investment fever in gulf countries

Ardean, McLaren, Blackstone, KKR, SoftBank, Carlyle, sports investment fund Monumental Sports, PGA Tour Golf League… Not a week goes by without a sovereign wealth fund from a Gulf country announcing a huge investment in the gem of Western finance Be it industry or services.

Even Lazard, the Franco-American investment bank with a storefront in Paris, wanted its share of the pie by trying to approach Emirati fund ADQ, before early announcements to their exchanges caused the deal to fail by June.

As the rest of the world heads into recession, the petro-monarchy is turning bitter towards international companies: they seem to be the last area capital is flowing into, which is oil and gas for a year. increased by a jump in the prices of

One-third of the capital is held by sovereign wealth funds

Between them – Saudi Arabia, Qatar, the United Arab Emirates, Bahrain, Oman and Kuwait – the Gulf countries manage around $3,700 billion in assets across twenty funds in 2023, according to an estimate by the Sovereign Wealth Fund Institute. They represent more than a third of the global capital held by sovereign wealth funds.

>> Read also: Saudi Arabia: The Bottom Line of MBS’s Soft Power Operation in France

“Gulf sovereign wealth funds have become leading investors since the 2008 financial crisis,

Ardean, McLaren, Blackstone, KKR, SoftBank, Carlyle, sports investment fund Monumental Sports, PGA Tour Golf League… Not a week goes by without a sovereign wealth fund from a Gulf country announcing a huge investment in the gem of Western finance Be it industry or services.

Even Lazard, the Franco-American investment bank with a storefront in Paris, wanted its share of the pie by trying to approach Emirati fund ADQ, before early announcements to their exchanges caused the deal to fail by June.

As the rest of the world heads into recession, the petro-monarchy is turning bitter towards international companies: they seem to be the last area capital is flowing into, which is oil and gas for a year. increased by a jump in the prices of

One-third of the capital is held by sovereign wealth funds

Between them – Saudi Arabia, Qatar, the United Arab Emirates, Bahrain, Oman and Kuwait – the Gulf countries manage around $3,700 billion in assets across twenty funds in 2023, according to an estimate by the Sovereign Wealth Fund Institute. They represent more than a third of the global capital held by sovereign wealth funds.

read this also Saudi Arabia: The Bottom Line of MBS’s Soft Power Operation in France

“Gulf sovereign wealth funds have become the leading investors since the 2008 financial crisis, when they pumped massive amounts of liquidity into banks and Western companies,” said Francois-Aissa Touzi, sector expert and chairman of the Abu Dhabi office of investment fund Ardean. miss. “But there, they are positioning themselves very clearly according to a new strategy. Their obsession with performance and profitability has added a new pivot to guaranteeing the prosperity of future generations: diversifying the domestic economy, either by building local giants, or by leading overseas investments that allow them to acquire knowledge. will allow. -how and technologies.” A major blow to the kingdoms, which a hundred years ago were mainly inhabited by tribes of traders and herders.

In the Emirates, the rise of the Youth ADQ Fund is a good example of the increasingly important role these institutions are playing in the midst of international investment and the development of technologies and industries locally. With its share of collusion between political power and business.

Sheikh Tahnoon bin Zayed Al-Nahyan, powerful leader of the United Arab Emirates

Created in 2018, the fund, which indicates it employs more than 65,000 people, was founded last March by one of the country’s most powerful men, Sheikh Tahnoun bin Zayed Al-Nahyan, brother of the UAE president. was taken. (UAE) Mohamed bin Zayed Al Nahyan. Besides ADQ, the 50-year-old also runs the country’s largest fund, Adia (Abu Dhabi Investment Authority), the country’s largest bank First Abu Dhabi Bank and industrial-financial conglomerate IHC (International Holding Company). In his spare time, he has also been the country’s influential National Security Advisor since 2016.

The motto of ADQ, which specializes in infrastructure, is to make the emirate a “knowledge-based economy”. It invests increasingly in areas of strategic importance and future and where the emirate is still dependent on its partners: energy, agriculture, health, logistics, transport, freight, with a tropism for local private and public actors whom it Wants to turn into leaders. such as national energy companies TAKA, waste management Tadvir, water and electricity EVEK; Agri-food conglomerates Al Dahra, tourism infrastructure groups Adnec and Miza, new transport colossus MRO (Etihad Airways, Abu Dhabi Airport, Etihad Rail etc.), or even the national stock exchange ADX.

tourism and entertainment

Same in Saudi Arabia. Under the encouragement of young ruler Prince Mohammed bin Salman, the leading country of oil exporters has begun its transformation, and seeks to become a player in tourism and world entertainment. PIF, the country’s sovereign fund, which is headed by the prince, announced in June an investment of hundreds of millions in sports, leading to tourism megaprojects such as the futuristic city of Neom – 500 billion euros alone – or the city of Al-Ula leisure facilities. , and by boosting the country’s transportation infrastructure.

But in its diversification, it is also lining itself up with leading companies that it says are destined to become global giants, such as Lucid Motors in electric cars, Noon and e-commerce, or even That hydrogen. And, in a vertical process of power and decision-making, the PIF has everything a sovereign has – banks, infrastructure, hedge funds – all with established stakes in Accor, ArcelorMittal, Vivendi, Uber, Blackstone and real estate. luxury.

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“We are witnessing a real “Gulf moment”, underlines François-Aisa Touzi. After failing to implement structural reforms in the 1990s, “leaders realized that oil would not be eternal, and this dependence There was an urgent need to get out.”

“These investments allow the Gulf countries to become powerful on the geopolitical scene, on the one hand by supporting themselves with Western democracies, and on the other by building closer ties with new strong allies, China, which represents The share is growing,” says Denis Bouchard, Middle East specialist at Ifri.

investment fever

But this investing fever has not always resulted in financial success. Decision-making ability, Ultra Vertical, remains opaque, subject to the prince’s facts that the fund has invested in a number of projects that have since failed. The Saudi National Bank’s last stake in Swiss bank Credit Suisse vanished with the Swiss institution’s collapse in April, despite reigning monarch MBS repeatedly pouring billions of dollars into the faltering bank. The leader also handed over two billion dollars in 2022 to the fund of Jared Kushner, son-in-law of former US President Donald Trump.

Never mind: international investors are willing to compromise with these characteristics and the region’s indifference to human rights. By 2026, the IMF estimates that oil-exporting countries should benefit from an oil windfall of about $1,000 billion.