The giants of private equity have spent years trying to cozy up to Middle Eastern wealth funds to secure massive cheques.
Global uncertainties have made those efforts even more critical and asset managers have been forced to get creative.
Carlyle Group Inc, for instance, is sending more than half a dozen of its top executives to Abu Dhabi this week to offer training to their counterparts at the emirate’s many sovereign wealth funds.
BlackRock Inc is starting up a programme to hire more young Saudis and is relocating a bevy of senior investment professionals to the kingdom to help with the effort.
Others have been organising dinners and events to honour Eid al-Fitr.
“It’s not just about opening an office,” said Bhaskar Gupta, the chairman of the Middle East and India boards at Apex Group Ltd, a fund servicing company.
“Building meaningful relationships through local customs - like evening shisha gatherings, weekend hunting trips, and shared dinners – plays a vital role in establishing trust and long-term partnerships.”
Buyout funds have spent years laying the groundwork for their charm offensive after facing steady pressure from Middle East sovereign wealth funds to host more gatherings in the region, set up local offices and bring more people to live and work in the area.
Carlyle’s workshop this week will be focused on different investing strategies including how investors can tap the private-equity secondaries market. The event reflects the firm’s “ongoing commitment” to proactive engagement with Middle Eastern funds, a spokesperson said.
BlackRock, for its part, launched the BRIM Graduate Development Programme after striking a partnership with Saudi Arabia’s Public Investment Fund last year. The initiative also includes a slate of training and development programmes.
“We are seeing general partners offering training events as asset managers look to invest more resources in the region,” said Drew McKnight, co-chief executive of Fortress Investment Group, which counts Abu Dhabi sovereign wealth fund Mubadala Investment Co as its majority owner. “There’s a desire from limited partners for companies not to just have a fundraising office.”
The US$11 trillion asset manager received approval from Saudi Arabia last year to set up its regional headquarters in Riyadh, as well as a commercial licence to operate in Abu Dhabi in November.
Global Infrastructure Partners, which was recently acquired by BlackRock and is close to raising roughly US$25bil for its latest flagship fund, is opening an office in Doha.
Heading into the year, private equity firms, which raised 23% less capital last year than in 2023, were riding a wave of optimism.
But recent global economic uncertainty dampened that optimism.
As a result, high-profile companies including Klarna Group Plc and Stubhub Holdings Inc have paused their initial public offerings and a slew of private-equity firms have shown signs of fundraising struggles.
Carlyle, for instance, recently shook up its leadership in Europe, where it has raised about 1bil or about US$1.1bil for Carlyle Europe Partners VI – a fraction of its original goal.
In the past, Gulf sovereign wealth funds are known for stepping in during a downturn: When liquidity evaporated from world markets in 2008, they came in and bought up everything from stakes in western lenders like Citigroup Inc to trophy assets like the Manchester City Football Club and Harrods. — Bloomberg
Alex Dooler writes for Bloomberg. The views expressed here are the writer’s own.
