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  • Wednesday, August, 2022| Today's Market | Current Time: 04:15:45
  • The Middle East is a major epicenter of the global investment industry. The region’s numerous affluent economies, generous oil revenues, and investment-friendly government policies have all contributed to the thriving investment climate.

    The regional governments, in particular, have long adopted an active role in the investment landscape of the Middle East. In fact, the largest investment entities in the region belong, in most cases, to the governments. In this article, we will take a detailed look at the region’s top ten investment companies.

     

    Investment Entities Included in Our List

    In order to compile our top ten list, we have researched a wide variety of investment-focused entities – both corporate (venture capitalists, angel investors, asset management companies (AMCs), investment banks) and governmental (mostly sovereign wealth funds). Sovereign wealth funds actively invest and manage government-allocated money. In many ways, these entities are similar to private sector investment funds. The obvious difference is that sovereign wealth funds manage public money while corporate investment funds manage the assets of private investors.

    The key criteria for qualification to our list was the investment entity’s assets under management (AuM) amount. As we composed our top ten list, it was evident that the Middle East’s investment industry has a clear dominance of government-owned sovereign wealth funds among the largest investors in the region. Nine out of ten top investors in the region by AuM are sovereign wealth funds.

    The only corporate investor type that has made it to our list is a privately-run AMC, the Dubai Investment Fund (DIF). The region’s 2nd largest non-government investor, Saudi-based SNB Capital, narrowly missed our top ten list with the 11th spot in the overall ranking.

    This dominance of public investors is a distinct feature of the region. In other key regions around the world, e.g., North America, Europe, and Asia, the largest investor lists typically include a mix of corporate and public investor types.

    The Middle East’s Top 10 Investment Companies – The Overall Figures

    As noted above, all but one of the region’s ten largest investors are sovereign wealth funds – investment vehicles owned by governments.

    The UAE is the country that dominates our list. Six out of the ten largest investors in the Middle East hail from this Gulf economy. Kuwait, Saudi Arabia, Qatar, and Iran each have one representative in the list.

    Given the UAE’s dominance by the number of entries in the list, it is no surprise that the country has the highest share of the total AuM among the region’s top ten investors. Out of the $3.7 trillion managed by the Middle East’s top ten investment organizations, nearly half ($1.8 trillion) belongs to the UAE entities – five sovereign wealth funds and one privately-run investment fund.

    The region’s top investment organizations typically manage hundreds of billions, with the average AuM figure being $372 billion. The region’s largest three investors have in excess of $500 billion AuM each.

    The Middle East’s Top 10 Investment Companies – The Individual Investment Organizations

    1. Abu Dhabi Investment Authority (UAE) – $709 billion AuM

    The region’s largest investor by AuM, the Abu Dhabi Investment Authority (ADIA), was established in 1976 by the government of Abu Dhabi to manage the Emirate’s revenues by investing them in a variety of markets, industries, and financial products.

    Though state-owned, ADIA operates and invests funds independently of the Emirate’s government. The organization’s investment strategy and decisions are driven by the Board of Directors and the Managing Director. The Managing Director is appointed by the decision of the Emirate’s Ruler.

    Similar to the majority of other sovereign wealth funds, ADIA avoids participating in high-risk investments. The fund has described its overarching investment strategy as “prudent”. ADIA invests government funds in equities, fixed income products, alternative investments, private equities, money markets, and more. The fund’s leading investment class includes developed markets’ equities. At least a third of the investment portfolio is designed to flow to this asset class. The other leading asset classes ADIA invests in include emerging markets’ equities and government bonds.

    2. Kuwait Investment Authority (Kuwait) – $708 billion AuM

    The 2nd entry in our list, the Kuwait Investment Authority (KIA), has nearly the same AuM as ADIA. KIA has the honor of being the world’s oldest sovereign wealth fund. It was established in 1953 as the Kuwait Investment Board to manage the country’s surplus oil revenues. Under its current name, KIA, the fund has existed since 1982.

    KIA is governed by a Board of Directors that makes investment strategy decisions independent of Kuwait’s government. The fund has established two overseas offices, in London and Shanghai, to better support its international investment operations.

    KIA is made up of two primary funds – the General Reserves Fund (GRF) and the Future Generations Fund (FGF). GRF is the main fund. The country’s surplus oil revenues are assigned to GRF for investment and capital growth purposes. This fund’s investments are focused on the Kuwaiti and MENA markets. The government of Kuwait may draw funds from GRF as required.

    The second fund, FGF, invests primarily outside of Kuwait. The fund’s investments include equities, bonds, private equity, infrastructure, and real estate projects. Unlike GRF, FGF may not be used by the government to draw funds from for public expenditure purposes. All returns generated by FGF are re-invested for further growth.

    3. Public Investment Fund (Saudi Arabia) – $620 billion AuM

    The Public Investment Fund (PIA) is Saudi Arabia’s sovereign wealth fund. Unlike the UAE, which has close to ten sovereign wealth funds, Saudi Arabia has only one such fund.

    PIA was established in 1971 and, similar to other massive investment organizations, has a very wide array of investment targets and geographies. The fund has split its investment operations into six primary pools – two internationally focused pools and four Saudi-focused ones.

    The international investment pools include the International Diversified Pool and the International Strategic Investments Pool. Under the diversified pool, PIA invests in fixed-income assets, equities, private equity, real estate, and alternative investments in international markets.

    The strategic pool seeks investments in large, long-term oriented assets and projects that support and advance the Kingdom’s strategic financial goals.

    PIA’s most high-profile investment is undoubtedly its 80% stake in the English Premier League club Newcastle United. Some of the other high-profile international investments made by the fund include popular taxi services provider Uber, Japanese investment giant SoftBank, and American alternative investments fund Blackstone.

    The fund’s four Saudi-focused investment pools specialize, respectively, in local real estate and infrastructure projects, equity holdings, the development of the economy’s various industry sectors, and large-scale strategic Saudi giga-projects.

    The Saudi giga-projects pool invests in massive, strategically-oriented local and regional projects. An example of these projects is the luxury tourism development environment, the Red Sea Project. Given the massive scale of these projects, they often require the support of gigantic government-run funds such as PIA.

    4. Qatar Investment Authority (QIA) – $461 billion AuM

    The Qatar Investment Authority (QIA) was founded in 2005 as Qatar’s sovereign wealth fund to help diversify the country’s investment operations. The fund is accountable for its investment decisions and performance to the country’s Supreme Council for Economic Affairs and Investment (SCEAI).

    QIA invests, both locally and internationally, in fixed income assets, private equity, public equity, real estate, infrastructure, and alternative investments, the complete bouquet one would expect from an investment giant of this size.

    The fund’s investments are primarily of a long-term nature, quite a common strategy among sovereign wealth funds, which are less predisposed than their private sector brethren to invest in shorter-term instruments and projects.

    The fund’s most recent publicly disclosed investments included UK-based mobile banking platform Starling Bank, American biopharma company BioXcel Therapeutics, and Florida-based sports merchandise retailer Fanatics.

    5. Dubai Investment Fund (DIF) – $320 billion AuM

    The only privately run investor in our list, the Dubai Investment Fund (DIF), is the absolute leader among the Middle East’s corporate investment funds. With a massive $320 billion AuM, the fund claims the 5th spot in our rankings. DIA is larger than the sovereign wealth funds of most countries in the region. Within the UAE, the fund is only second to ADIA by AuM.

    DIF was founded in 2001 and features over 7,300 investors across more than 61 geographies. The fund invests in a variety of asset classes, with a particular focus on renewable, emerging, and alternative investments.

    DIF’s investments cover a wide variety of sectors and asset classes, including energy, retail, financial services, healthcare, cryptocurrency and blockchain, real estate, private equity, listed securities, alternative investments, and more.

    Unlike sovereign wealth funds, DIF maintains a more flexible balance between short-term and long-term investments. Being a private entity, the fund does have the luxury of this flexibility. In comparison, state-owned sovereign wealth funds often have to prioritize long-term investments simply due to the investment strategies mandated by their governments.

    6. Investment Corporation of Dubai (UAE) – $302 billion AuM

    The Investment Corporation of Dubai (ICD) is the primary sovereign wealth fund of the government of Dubai. ICD was established in 2006 to manage the government’s portfolio of investments and companies.

    ICD invests in a variety of sectors, with a particular focus on the financial services and transportation industries. Other investment sectors include oil & gas, hospitality, industrial, real estate, and retail.

    Within the banking and financial services allocations, ICD has invested in the leading banks of Dubai – Emirates NBD, Commercial Bank of Dubai, and Dubai Islamic Bank. It also has made significant investments in Nasdaq Dubai and, internationally, in Nasdaq Inc., the operator of the NASDAQ stock exchange.

    Under its transportation industry arm, ICD owns both of Dubai’s airlines – Emirates and FlyDubai. The fund also owns some other strategic enterprises of the Emirate, including the Emirates National Oil Company (ENOC). ICD’s major focus is investments in larger enterprises critical to the Emirate’s economy.

    7. Mubadala Investment Company (UAE) – $284 billion AuM

    This is another government-owned investment fund from the UAE. Mubadala Investment Company was founded in 2017 when two Abu Dhabi-based sovereign wealth funds, Mubadala Development Company and the International Petroleum Investment Company, merged. Mubadala’s sole shareholder is the government of Abu Dhabi, and the company is classified as a sovereign wealth fund.

    It carries out investment activity with the goal of diversifying and optimizing investments on behalf of the Abu Dhabi government. While the company invests both locally and internationally, it has a particular focus on international investments. Mubadala has established foreign offices in London, New York, Beijing, and Moscow, and has investments in more than 50 countries around the globe.

    Mubadala has structured its operations along four divisions – UAE investments, direct investments, disruptive investments, and real estate & infrastructure. The UAE investments division specializes in local investments aimed at the energy, metals, technology, healthcare, and aerospace sectors.

    The direct investments division mainly invests in high-growth companies in North America, Europe, and, to a lesser degree, in China. The investment sectors include technology, life sciences, industrials, and financial services.

    The disruptive investments division specializes in venture investments, credit markets, and the management of Mubadala’s direct investment initiatives.

    The real estate & infrastructure division focuses on Mubadala’s local and international investments in real estate and infrastructure projects.

    8. National Development Fund of Iran (Iran) – $139 billion AuM

    The National Development Fund of Iran (NDFI) is the country’s sovereign wealth fund established in 2011 to manage and invest Iran’s oil revenues. It was established as a supplement to the country’s first sovereign wealth fund, the Oil Stabilization Fund (OSF). By now, NDFI has grown much larger than OSF. With $139 billion AuM, NDFI is the only investor in our list outside of the Gulf Cooperation Council (GCC) area.

    NDFI described its investment strategy as “moderate risk”. Due to the extensive international economic sanctions applied against Iran, NDFI has more of an inward-looking investment strategy, with the majority of its investments and assets located within the Islamic Republic.

    The fund has reported financing around ten sectors of the country’s economy. Among these sectors, the three leading ones are oil &gas, refineries, and petrochemicals. The fund also invests in the country’s other strategic sectors, such as water, food industries, and transportation.

    9. Abu Dhabi Developmental Holding Company (UAE) – $102 billion AuM

    The Abu Dhabi Developmental Holding Company (ADQ) was established by the government of Abu Dhabi in 2018 with the goal of supporting the Emirate’s longer-term policy-driven investments. It is wholly owned by the government of Abu Dhabi. The government oversees the fund’s operations via the Supreme Council for Financial and Economic Affairs (SCFEA).

    ADQ invests in key sectors of Abu Dhabi’s economy, such as energy, healthcare, logistics, real estate, media, and telecom. In total, the fund’s investment activity spans 11 sectors of the Emirate’s economy.

    Although ADQ has a specific focus on longer-term strategic investments within Abu Dhabi, it is also active on the international stage and in the other Emirates of the country, particularly in the pharmaceutical industry. Its list of external acquisitions includes Swiss pharmaceutical company ACINO, Egypt’s leading pharmaceutical manufacturer, Amoun Pharmaceutical, and Dubai-based Pharmax Pharmaceutical.

    10. Emirates Investment Authority (UAE) – $78 billion AuM

    The Emirates Investment Authority (EIA) is another UAE-based sovereign wealth fund in our list. EIA is the country’s only sovereign wealth fund at the federal level. It is the primary investment manager of the UAE’s federal funds.

    EIA was founded in 2007. Its AuM is considerably lower than the AuMs of the emirate-level sovereign wealth funds from our list.

    Similar to the majority of other sovereign wealth funds, EIA focuses on long-term strategic investments, often into large and iconic companies in the UAE. Among the fund’s most high-profile holdings are stakes in the country’s two telecom operators, Etisalat and Du. Public equities, followed by fixed income investments, are the largest asset classes in the fund’s portfolio.

    EIA concludes our list of the Middle East’s top ten investment companies. Although the fund manages a massive amount of capital, $78 billion, its AuM is dwarfed by the AuMs of the largest funds in our rankings. This is a testament to the region’s vast wealth and the gigantic potential of its leading investors.

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