Speaking alongside Mr. Ramzi AbdelJaber, Head of Investcorp’s Business Development Unit in front of members of the Harvard Private Equity Roundtable at the Harvard Club of New York, Long predicted that the oil boom will translate into an investable asset pool in excess of $10 trillion by 2020.
However, unlike previous oil booms, an emerging set of investments trends will have a significant impact on how capital will be deployed.
Long and AbdelJaber outlined the main trends: increased investments on shore in the MENA region and in Asia; a shift in allocation to alternative investments and more direct investment strategies; the increased sophistication and institutionalization of the Gulf region including the growing importance of corporate governance; a booming demand for Islamic products and the rapidly growing importance of Sovereign Wealth Funds.
They emphasized the new and increasing tendency of GCC investors’ to make local investments. For example, in 2002, nearly 85% of the Gulf’s wealth was invested abroad in financial instruments mostly linked to the U.S. Dollar. However, by 2007, this had fallen to 75% due to the rising investment within the Gulf region itself. Increasing investment in the MENA region and Asia had in turn led to an amplified demand for alternative investments such as private equity and hedge funds.
This shift in strategy has been driven by the need to invest more aggressively in hard and soft (social) infrastructure to cater for fast growing populations following decades of under-investment; and the emergence of more attractive onshore investment opportunities buoyed by the strong regional economic growth.
Fueling these trends are the predicted record figures for the region’s oil revenues which will far outstrip the region’s current Gross Domestic Product of $800bn. Long and AbdelJaber told their audience at New York’s Harvard Club to expect the Gulf region to soon take a place among the 10 major global economic powers, moving up from its current 16th placed ranking.
In line with these emerging trends, Investcorp’s Gulf Opportunity Fund focuses on developing Small and Medium Enterprises (SMEs) in the region. Investcorp’s strategy is to act as a bridge, facilitating and contributing towards investments into the region using expertise accumulated by the institution following 25 years of successful investment and placement funds.
Wednesday, July 9- 2008 @ 13:00 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.