Frosty relations with the US have chipped away at Chinese private equity, but investors in the Middle East have been more than willing to step into the breach.
The Financial Times reported Tuesday that Abu Dhabi’s sovereign wealth fund is looking to pick up stakes in funds managed by Hong Kong-based PAG, one of Asia’s largest PE firms, as US investors wind down their exposure in China.
This is not an isolated example. In January, law firm Morrison Foerster’s report on global PE trendsillustrated how Chinese GPs, who have struggled to raise capital from North American LPs, have been increasingly dependent on commitments from sovereign wealth funds from other regions, especially the Middle East and Singapore, as a main source of funding.
While Middle Eastern governments have more capital to put to work in China, private investors from the region —unfettered by the geopolitical concerns facing some US investors—have been equally bullish on China. In November, Bahrain-based Investcorp revealed it was seeking to raise as much as 4 billion yuan (about $555.6 million) for its first Chinese currency PE fund.
But it’s not just Chinese funds that are eyeing LP investments from the region. Earlier this month, we noted how more PE firms, many from Europe, have been establishing a presence in the Middle East to source deals and tap its vast reserves of oil wealth.
Featured image of Abu Dhabi by Shahin Olakara Photography/Getty Images
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