Page 66 - Aamir Rehman Gulf Capital and Islamic Finance The Rise of the New Global Players

CHAPTER 2 Entrusted Stewards 51

institutional investors. Understanding these broad categories and the
characteristics of investors in each category is crucial for observers of
the Gulf who wish to attract, advise, study, regulate, or otherwise
engage with GCC capital. In addition to laying out these categories,
the chapter offers perspective on how the landscape we describe is
evolving, as each category is developing with its own set of unique
dynamics. This chapter will help you go below the surface of the Gulf
investor base and feel the contours of the institutional topography.

SETTING THE STAGE: FOUR BROAD CATEGORIES OF INVESTORS

The landscape of Gulf investors is, of course, complex and dynamic,
and therefore impossible to neatly classify into precise buckets. An
analysis of key institutional attributes, however, reveals four broad
categories:

■ “Generalist” sovereign wealth funds
■ “Specialist” government investment vehicles
■ Private institutions
■ Private investment houses

Table 2.1 summarizes the key attributes of each category, con-
trasting them along five key dimensions.
The relative sizes of the four categories cannot be precisely
known, since assets under management are rarely disclosed in pub-
lic. Analyst estimates suggest, nonetheless, that the bulk of Gulf
capital is held by the generalist sovereign wealth funds (SWFs),
with the next largest category being private institutions. According
to 2009 estimates by the Sovereign Wealth Fund Institute, Gulf
2
SWFs hold about $1.6 trillion in assets. McKinsey & Co. estimates
that the category of investors that we have classified as “private
3
institutions” controls about $900 billion in wealth. The other two
categories—specialist government investment vehicles and private
investment houses—are growing rapidly and may have roughly
5
4
$150 billion and $65 billion in assets under management, respec-
tively. Generalist sovereign wealth funds and private institutions
may therefore be seen as the bedrock of Gulf capital, with the other
types of institutions adding diversity and dynamism to the
landscape.