In a challenging fundraising environment, private fund managers start to look outside their home regions for new sources of capital. This is particularly true in the Asia-Pacific, where fundraising declined significantly in 2023 compared to the previous year. In recent years, many Asian fund managers have started looking at the Middle East as a potential source of investment. This is not surprising. The UAE, Saudi Arabia and Qatar are home to some of the world’s largest sovereign wealth funds. The region has also seen substantial growth in private and government-sponsored institutional funds. With private wealth surging, family offices represent another significant pool of investment capital. While the region’s wealth is most often associated with oil, governments have undertaken major initiatives to diversify their economies into such areas as technology and green energy, which have become key drivers of investment.
So what do Asian fund managers need to know about the Middle East to tap into its potential? At the 2023 AIMA APAC Annual Forum in Hong Kong, SS&C GlobeOp Managing Director Michael Li moderated a panel of seasoned professionals representing many years of experience cultivating relationships and doing business in the Middle East. In the course of a wide-ranging discussion and interesting personal anecdotes, a few key takeaways emerged.
Establish an on-the-ground presence: To start building relationships in the Middle East, it is essential for Asian managers to set up an on-the-ground presence in the country they are targeting. Not only does this make it easier to network and hold meetings, but it also signals the necessary level of commitment. Investors are likely to have many questions about your strategies before they make a decision, and it’s important to be accessible for follow-up frequently.
Develop personal relationships: In this age of international video-conferencing, it is important to recognize that decision-makers in the Middle East want to meet in person, shake hands and look their prospective partners in the eye. A performance track record and fund prospectus will only get you so far. Arab investors want to get to know the people to whom they are entrusting their capital. They want to personally assess a manager’s seriousness of intent.
Understand investors’ interests: Rather than simply going into the market and trying to sell a product, take the time to meet investors, listen carefully and find out what they are looking for, then develop targeted strategies that address those needs. Investors in the Middle East tend to be very patient and take the long view. They are less interested in short-term returns than worthy investments that will benefit their countries while delivering steady, long-term growth. Opportunities in sustainable energy and advanced technologies are especially interesting right now as investors evaluate managers from outside the region.
Respect the culture: It takes time and a willingness to learn to understand the cultural nuances of the market. In particular, investment strategies and holdings need to comply with the tenets of Islamic teachings and traditions.
Fortunately, the region is very welcoming and hospitable to foreign fund managers looking to establish a presence in the region. Saudi Arabia’s Special Economic Zones, the UAE’s Dubai International Financial Center and the Abu Dhabi Global Market (ADGM) offer a variety of incentives and support services to help managers get set up. Over the past decade, a robust ecosystem of international banks, insurers, legal advisors and service providers has developed to support a growing community of global fund managers.
SS&C GlobeOp has built a sizeable presence in the Middle East and stands ready to help Asian fund managers establish operations, navigate opportunities and make those all-important local connections. In the meantime, download our "Five Key Trends Shaping the Middle East Fund Landscape" whitepaper for an in-depth overview of opportunities and challenges in the market.
Written by Michael Li
Managing Director, APAC