GCC Investors: A Changing Landscape
Sovereign Wealth Funds
SWFs have become increasingly internationally focused over the last 10 years. Their role in developing the regional asset management industry will remain limited. These organizations are often set up with a specific mandate to deliver returns for future generations, using proceeds from natural resources trade surpluses.
Social Insurance and Pension Funds
These organizations have been investors in the domestic markets/companies for many years. Internally they are reviewing their returns profile and reexamining asset allocation with a view to considering alternative asset investment opportunities. Examples include General Organization for Social Insurance in Saudi Arabia or the Abu Dhabi Retirement Pension & Benefits Fund in the UAE.
This pool of capital is emerging and will increase meaningfully due to sociopolitical changes in the region. Examples include King Abdullah University of Science and Technology (KAUST) in Saudi Arabia, which announced an endowment of $10 billion, one of the largest in the world. It is currently difficult to accurately calculate how much this emerging pool of capital may have in reserves, but there are certainly a number of universities in the region that are worth exploring. The American University in Beirut, Sharjah and Cairo are examples.
Ultra High Net Worth Individuals and Family Offices
Ultra High Net Worth Individuals (“UHNWIs”) and Family Offices remain the largest and most important investor types in what is easily the wealthiest region in the world. With over 400,000 UHNWIs in the region (three quarters of the number in China as a whole), and estimated aggregate liquidity of $3 trillion (according to a 2015 study) funds cannot afford to ignore Family Offices and UHNWIs.
Institutions including central banks, commercial banks, insurance companies and other non-financial corporates are key sources of capital for regional funds.
Accredited Investors are a significant source of investments and liquidity in the GCC region. Their ability to participate across various asset classes will increase over time as GCC countries introduce regulatory provisions enabling access to foreign investment products. High income retail groups, mostly the local population, typically utilize wealth managers and private bankers to access international investments. That said, there is a vast reservoir of cash and deposits waiting to be tapped and can be targeted by the regional asset management industry today through fund structures.
GCC Investor Breakdown
GCC Investable Wealth ($ billion)
GCC SWF Assets ($ billion)
2021 Forecasted GDP for the GCC: $1.448 trillion
(1) Source: IMF
(2) Figures in $ billion
2021 Forecast - Capital Raising Potential By Country
(1) Based on Greenstone’s estimates