Page 242 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

224 Dubai & Co.

unattractive yields. Rational GCC investors therefore saw more
promise in local markets and international markets other than the
United States’ and decided to revise their investment strategy
accordingly. This decision had more to do with return than with
opposition to the Bush administration. In fact, the portfolios and
acquisition activities of high-profile Gulf investors such as Alwaleed
Bin Talal (major investor in the Four Seasons Hotels, Apple,
Citigroup, the News Corp., and other global businesses) confirm
that the Gulf has not lost its appetite for US and Western assets.
Another important difference between the booms of the 1970s
and the 2000s is the diversity of financial instruments used. Whereas
petrodollars in the 1970s were overwhelmingly channeled toward
traditional asset classes such as fixed income and listed equities,
capital in the 2000s has flowed not only into these asset classes but
also a wide range of alternative assets such as private equity, real
estate, and hedge funds. Alternative assets have been acquired in
both international and domestic markets. Abu Dhabi’s active invest-
ment arm Mubadala—funded by ADIA—has made a number of
prominent private-equity investments at home and abroad, includ-
ing the purchase of a 5 percent stake in Ferrari. The sectors in which
Mubadala has invested reflect the core sectors of growth in the
region: energy, industry, health care, infrastructure, and education.
One of the more interesting portfolio companies is SR Technics, an
airplane maintenance firm with Swiss origins and well positioned to
service the region’s fast-expanding airline market.
International and regional private-equity firms alike have been
actively raising capital in the region. Leading private-equity firms
such as Blackstone and Carlyle call on Gulf investors frequently and
include the region in fund-raising strategies for massive new global
funds. Local firms raising funds of $500 million or more include
Abraaj Capital of the UAE, Global Investment House of Kuwait, and
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Bahrain-based Investcorp. Investcorp has a long history of invest-
ments in the West, including buyouts and complete turnarounds
of luxury retailers like Tiffany’s and Saks Fifth Avenue. Between
2005 and 2006, the amount of private-equity investment raised by
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local firms grew by about 80 percent, to nearly $10 billion. This
figure does not include the large investments made by Gulf
investors in Western and global private-equity firms, or the direct
investments made by institutions and high-net-worth individuals.