Private equity rushes to Gulf as fundraising dries up
By Hadeel Al Sayegh and Anousha Sakoui
RIYADH/LONDON (Reuters) — A growing number of private equity funds are opening offices in the Gulf, hoping to deepen their ties with cash-rich sovereign wealth funds and families in the region as funding for buyouts has dried up elsewhere.
While the Gulf had previously been a place where buyout groups would go to raise money to invest in other markets, increasingly they are looking to build teams on the ground, invest in local businesses and help develop the region's asset managers, private equity funds and advisers said.
Global fundraising for alternative investments, which include private equity, dropped 21% to $972 billion in the year to Nov. 1 from the same period a year earlier, according to research firm Prequin. Rising interest rates have pushed up the return investors can make in rival assets classes such as bonds.
As their money becomes more vital, Gulf funds are encouraging private equity firms to invest locally in plans for a post-oil future. These include diversifying into other energy sources like hydrogen, building state companies into regional champions, attracting foreign investment, and creating jobs.
«Building a partnership based on reciprocity is nowadays necessary to succeed in the Gulf,» said Francois Aissa-Touazi, co-global head of investor relations at private equity fund Ardian.
Ardian opened an office in Abu Dhabi in January and currently has a team of 12. «The objective is to reach 25 people by end of next year. We will soon have a hydrogen investment team based in our office,» Aissa-Touazi said.
On the sidelines of last week's Future Investment Initiative (FII) — dubbed Davos in the Desert — the deputy governor of Saudi Arabia's sovereign wealth
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