Who’s your banker now?
As higher interest rates and fears of recession have made many Western investors skittish, sovereign wealth funds in the Mideast are realizing that Disruption means opportunity, Bloomberg News reported.
According to a detailed story by Dinesh Nair, Matthew Martin, Nicolas Parasie and Archana Narayanan, Mideast funds from Saudi Arabia to Qatar to Abu Dhabi are using the more than $3.5 trillion they manage for some of the world’s top M&A activities – rescue packages, investments and acquisitions.
Examples from their story include:
- First Abu Dhabi Bank PJSC has investigated a bid for British financial giant Standard Chartered Plc, which is worth more than $20 billion.
- Saudi National Bank is partly owned by the country’s sovereign wealth fund.
- Qatar Investment authority poured $2.4 billion into German multinational energy company RWE and $500 million in Celonis, a software company.
- Kuwait Investment Authority’s deals include $1.5 billion in Direct Chassis and $500 million in telecommunications company Phoenix Tower.
Besides taking advantage of the fact that Western investors are closing their wallets, the Middle Eastern funds are being strategic, concentrating on long-term value and diversifying the region’s oil-based economy. Those investments are a far cry from previous Gulf investments that made big news, such as Harrods department store, fancy real estate transactions and the Manchester City Football Club. Flush oil prices from the fallout of the Russia-Ukraine war have not hurt, as Saudi Arabia alone has been pumping out up to $1 billion worth of oil a day.
Meanwhile, many Western private equity and venture capital organizations, despite record levels of fundraising, are taking a wait and see approach. Techcrunch reported that venture capital fundraising alone was on pace to total $172 billion – still a far cry from the trillions available from the Middle East.
Jim Tompkins, Chairman of Tompkins Ventures, is an international authority on designing and implementing end-to-end supply chains. Over five decades, he has designed countless industrial facilities and supply chain solutions, enhancing the growth of numerous companies. He previously built Tompkins International from a backyard startup into an international consulting and implementation firm. Jim earned his B.S., M.S. and Ph.D. in Industrial Engineering from Purdue University.