For many of those opening in Abu Dhabi, it’s a way to get closer to SWF clients in the region, a long-term bet on the Gulf’s growth, and a potential foothold for further expansion.
New Mountain Capital, which manages $60 billion, opened an office in Abu Dhabi earlier this month as a bet it can be a gateway to a region that will continue to generate more wealth than it can invest domestically, despite the current volatility.
“We approach our business with a long-term perspective at New Mountain, and our decision to establish a local presence reflects our conviction in the Gulf’s growing importance as a global capital allocator and our commitment to serving the region for years to come,” Adam Weinstein, President and COO said in a statement to Semafor.
Abu Dhabi — which fashions itself as the “capital of capital” — uses its wealth to attract foreign investors to the emirate, partnering with global firms on domestic deals and international ones. Mubadala has become the world’s most active sovereign wealth fund this year.
“Abu Dhabi’s attraction endures” despite the conflict, said Hasnain Malik, managing director for Emerging Market Equity & Geopolitical Strategy at research group Tellimer. The emirate offers firms “proximity to sovereign investors, tax free jurisdiction, regulatory framework, time zone, and air transport connectivity, in order of descending importance.”
Other cities in the region have had less success attracting first time entrants this year. Just two firms announced plans to open their first Gulf offices in Riyadh, although one of those was the $518 billion Singapore sovereign fund Temasek, which said it would open in Abu Dhabi at the same time. Riyadh has attracted the biggest names in global finance to the kingdom in recent years, but most of them already had operations elsewhere in the region first. Only one firm, Silicon Valley-based Activate Capital, has said it will set up regional operations in Doha as part of an agreement with the Qatar Investment Authority. The firm is betting that it can use Doha as a hub for scouting investment opportunities across the Global South.
That is indicative of another trend — the Gulf has increasingly become a location for finance firms looking for new markets to drive growth across the wider region. That’s part of what lured Capital Group, which manages $3.3 trillion, to open in Abu Dhabi this year.
“Establishing a presence in Abu Dhabi is an important step in our long-term strategy to accelerate growth globally,” said Benno Klingenberg-Timm, Head of Abu Dhabi Office and Head of Institutional for Europe and Asia, Capital Group. “The current geopolitical environment does not change that long-term commitment.”