Within the moneyed circles of the Middle East, there’s increasing talk of a shifting power dynamic in the upper echelons of high finance.
Gone are the days of private equity bigwigs and hedge fund honchos flying to the Gulf, shuttling between five-star hotels and gleaming office towers in Abu Dhabi, Doha and Riyadh, then leaving with massive checks for their latest funds.
Sitting atop nearly $4 trillion and acutely aware of their importance to Western capital markets, the Middle East’s biggest state-controlled funds are increasingly asking asset managers what they’ll do in return for an investment. These firms are being urged — and at times required — to have more gatherings in the Gulf, set up local offices and bring more people to live and work in the area.
Apollo Global Management Inc., for instance, shepherded about 200 people to Abu Dhabi early this year, holding company events and senior-level meetings with Mubadala and other local partners. Blackstone Inc. has been allowing more investors from sovereign wealth funds to train on its teams within the firm.
Interviews with more than a dozen investors, lawyers and intermediaries in the region, who requested anonymity to discuss private conversations, show that a group of sovereign wealth funds in countries including Saudi Arabia, the United Arab Emirates and Qatar are flexing their financial might in a previously unseen way.
The growing heft of these Middle Eastern groups is set to disrupt the economics of what’s traditionally been one of the most profitable corners of the investment industry. Firms are doing away with their typical management and performance fee arrangement in order to secure commitments for their latest funds.
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