Oil-rich Gulf monarchies are channeling more international deals via state-backed firms instead of the region’s sovereign wealth funds, as they seek to diversify their economies and win more global heft.
Alongside billions of dollars of sovereign investments, state-run companies in the United Arab Emirates and Saudi Arabia — many of which are also backed by the wealth funds — have been involved in at least $50 billion in deals this year across sectors from telecommunications to renewables and gaming.
Although the global investment spree by sovereign funds is likely to continue, more of the strategic deals are expected to be done via the region’s largest corporates such as Abu Dhabi’s clean-energy producer Masdar, Emirates Telecommunications Group and Saudi Arabian Mining Co.
This week, Pure Health — majority owned by Abu Dhabi’s ADQ — bought one of the UK’s largest independent hospital operators in a $1.2 billion deal. AviLease, a jet lessor owned by Saudi Arabia’s Public Investment Fund, agreed to buy Standard Chartered Plc’s aviation finance business for $3.6 billion.
The shift in dealmaking highlights how Gulf states are seeking to fulfill their outsized international ambitions, while creating top global companies amid limited expansion opportunities at home. Such efforts dovetail with wider plans to attract investment and technology, as well as build new industries and manufacturing capabilities. The strategy emulates the example of countries such as South Korea, where companies like Samsung Electronics Co Ltd. have become household names.
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