'Fairytale' of Middle East investment funds

Billion-dollar investments in industries shaping the future of the global economy are gradually replacing oil to create “new power” for Middle Eastern economies.

Middle Eastern investment funds are known as “ATM machines” that never run out of money for potential projects. (Source: Asianinvestor)

“Boundless Horizons: Investing Today, Shaping the Future” is the hottest topic in Saudi Arabia’s capital Riyadh these days. Taking place from October 29-31, the eighth Future Investment Initiative (FII) conference is not only a magnet for projects looking to raise capital, but also serves as an investment hub for innovative ideas on the road to a prosperous and sustainable future.

The Middle East is not just about oil.

Since its launch in 2017, the annual FII Conference in Riyadh has emerged as a leading event in the world of finance, with deals signed that could not be better – the 2021, 2022 and 2023 conferences totaled around $109 billion.

The above results exceeded the expectations of a national conference, when the event was originally intended to implement the Saudi Arabian Economic Reform Strategy initiated by Crown Prince and Prime Minister Mohammed bin Salman and implement the Vision 2030 Initiative - promoting non-oil growth including finance, manufacturing industry, high technology, agriculture, tourism, expanding the private sector and creating jobs...

FII is now known as “Davos in the desert” – a reference to the World Economic Forum (WEF) Annual Meeting in Davos, Switzerland – bringing together global leaders, businessmen, politicians, and policymakers from a wide range of fields, from finance and economics to decision makers on artificial intelligence (AI), sustainable development, energy, geoeconomics, and space.

Analysts commented that the FII Conference not only gives the “Middle East kings” an opportunity to appear on the world financial stage but also expand their influence and consolidate their position globally. The geo-economic dialogues serve as “an important supplement” to the global dialogue, equipping strategic leaders with forward-thinking thinking to navigate the global landscape in the coming time.

Ahead of the event, FII CEO Richard Attias said that 7,100 delegates from around the world registered to attend; the expected deals announced were worth a total of $28 billion; FII 2024 was so attractive that business leaders had to pay $15,000/person to attend... Just those numbers were enough to "flex" the "hotness" of Middle Eastern investors today.

The event is all the more compelling as it takes place against a backdrop of global foreign direct investment (FDI) flows falling for the second consecutive year in 2023, as the world economy slows and trade and geopolitical tensions intensify. Global FDI flows are expected to fall 2% to $1.3 trillion in 2023, according to United Nations data.

The “ATM Machine” of the Financial World

According to Goldman Sachs' calculations, the total assets of the countries of the Gulf Cooperation Council (GCC) are expected to increase from 2,700 billion USD in 2021 to 3,500 billion USD in 2026. The assets of this bloc are forecast to continue to grow strongly in the coming years, providing abundant capital for investment in new development industries.

In fact, Saudi Arabia's Public Investment Fund (PIF) is worth 925 billion USD and is in a strong investment phase, aiming to realize the Vision 2030 initiative. Other Middle Eastern investors with outstanding financial capacity such as the Mubadala Investment Fund of the United Arab Emirates (UAE) ($302 billion), the Qatar Investment Authority ($475 billion) or the Kuwait Investment Fund ($800 billion)... are not out of the new game.

With vast fortunes thanks to the oil boom, at a time when traditional Western financiers are struggling, forced to pull out of deals, or tighten their grip on private investments, Middle Eastern sovereign wealth funds are emerging as important financiers in shaping the future of the global economy, driving the development of the technology industry, with a particular interest in new-trend industries, such as emerging artificial intelligence projects.

As evidence, investments in AI and the brightest startups from the Middle East have increased fivefold over the past year, according to data from Pitchbook.

CNBC commented that very few venture capital funds have the potential to compete with the billion-dollar investments of Microsoft or Amazon. However, it is different for Middle Eastern sovereign wealth funds, they have no problem "putting money" into billion-dollar investments that "have a very good future".

The media even likened Middle Eastern investment funds to “ATM machines” providing money to private equity, venture capital and funds that are having difficulty raising money elsewhere. The mergers and acquisitions (M&A) market is also more vibrant with increasing interest from the Middle East, with diverse industries from investment banking, retail, hospitals, food… to even sports projects.

However, the Middle East's investment in AI and emerging industries is not just a financial exercise, but part of a strategy to diversify the economy and build a sustainable future.

Not only Saudi Arabia, other oil giants in the Middle East, such as Kuwait, UAE or Qatar, all share the same goal of diversifying their economies and one of their steps is to strongly shift from the traditional oil economy to technology, not only as a precautionary measure, but as a new path of development.

It can be said that in the past two years, if AI has "stormed" the world, after OpenAI launched ChatGPT, Middle Eastern funds have also caused a "tsunami" in the capital calls of technology "giants".

“Everyone wants to go to the Middle East now, just like the gold rush in the US,” said Peter Jädersten, founder of fundraising consultancy Jade Advisors.

Source: https://baoquocte.vn/co-tich-ve-cac-quy-dau-tu-trung-dong-292029.html