Gulf States Outpace Asia in Private Equity Investments
- Regional investors increasingly combine traditional commitments with specific assets
- North America accounts for 75% of global joint and direct investment
The bank clarified that investors in the region are increasingly moving toward combining traditional commitments from non-specific asset investment funds, known as "Blind Pool" funds, with direct investment in specific assets, aiming to improve the risk and return profile.
It noted that investors in the Middle East, particularly limited partners, typically require longer timeframes to build relationships and establish trust with new fund managers. In this context, joint and direct investments provide a means to strengthen these relationships, given their greater alignment of economic interests compared to traditional private equity fund structures.
Accordingly, fund managers have begun presenting joint investment opportunities to regional investors at early stages of the relationship, potentially paving the way for larger allocations to their funds in later stages.
Despite the growing reliance of regional investors on this strategy, North America still holds the largest share of the global joint and direct investment market, accounting for approximately 75% of total activity, according to Holley Loke research.
European investors represent about 14% of the market, while Canada, the Middle East, and Africa each hold around 4%. Gulf countries outperform Asia in private equity investments, with the Asia-Pacific and Latin America regions each accounting for slightly less than 2%.
Survey results showed expectations that direct investments would yield higher returns compared to several other private equity strategies. Fifty-nine percent of participating investors expected direct investments to consistently deliver the highest returns, compared to 38% who favored joint investments.
These findings are based on an internal survey of 56 of the world’s most active investors in joint and direct investments in targeted companies and assets.
None of the participants expected investments in primary funds or secondary transactions, including deals led by general partners and limited partner stake purchases, to yield the highest returns. However, these strategies remain valued for their role in diversifying investment portfolios and mitigating risk.
Investment platforms in energy transition and infrastructure, including Saudi Arabia’s Public Investment Fund, Mubadala, Qatar Investment Authority, alongside other investors from Gulf countries and international general partners, continue to capture a significant share of joint investment activity led by regional sovereign wealth funds.
In this context, a partnership in the infrastructure sector targeting investments worth $30 billion was announced last May, led by BlackRock’s Global Infrastructure Partners, with participation from Abu Dhabi’s Al Etihad Holding, Abu Dhabi National Oil Company (ADNOC), and Singapore’s Temasek. The partnership aims to capture investment opportunities in Gulf Cooperation Council countries and Central Asia.
