Middle East sovereign wealth funds continue to grow

Sovereign wealth funds (SWFs) in the Middle East have been building their asset management and private equity divisions this year, and it’s easy to see why – their assets continue to grow. However, their slice of the global pie has diminished over the past two years.

The SWF Institute has just produced its latest rankings, and funds in the Middle East still feature highly. The Abu Dhabi Investment Authority, which is currently looking for 45 private equity professionals, still tops the table with a massive $627bn in assets. Saudi’s SAMA Foreign Holdings is in fourth spot and now has $532.8bn in assets.

However, while SWFs in the Middle East still make up 35% of the total global asset pool, second only to Asia with 40%, their share appears to be shrinking. In 2009, it made up 37%, but gains from SWFs in Europe and the Americas have eaten into the Middle East’s global standing.

Not surprisingly, international asset managers, private equity firms and investment banks have all expanded into the Middle East in a bid to develop relationships with the large sovereign wealth funds. However, the SWFs are keen to develop in-house expertise to manage their assets.

In some cases, this is simply developing talent in-house – ADIA requires all its front line employees to complete the CFA qualification, for instance – but often external asset management firms have been drafted in to train SWFs staff, which will eventually render their services redundant, of course.

Here are the Middle East SWFs featured in the latest rankings: