Investment firms look beyond Iran war to expand in Middle East
Asset managers and hedge funds say they remain committed to the region despite the current disruption
Asset managers and hedge funds say they are expanding in the Middle East, predicting that business disruption as a result of the Iran war will only be temporary.
State Street, which has $5.6tn in assets under management, announced plans in late January to open a new operating centre in Al Ain, Abu Dhabi, weeks before the US and Israel launched strikes on Iran.
“We will go ahead with our plan,” said Joerg Ambrosius, State Street’s head of investment services. “Our commitment to the region is unchanged.”
He noted that State Street already had a regional headquarters in Saudi Arabia and offices in Abu Dhabi and Oman. “We are still very positive on the midterm and long-term prospects of [the Middle East].”
Partners Capital, a $75bn UK-based manager specialising in endowments and family offices, opened its first Abu Dhabi office on Monday.
“I think we’re doubling down; we’re not pulling back at all,” Partners’ chief executive Arjun Raghavan said.
“Just because you’ve had this conflict, doesn’t mean that 40 years of planning, particularly in the last decade . . . is just going to disappear,” he added. “If you come across as a tourist in the region, then I don’t think you succeed.”
State Street and Partners were among a handful of managers who highlighted their commitment to Middle East expansion in interviews with the FT, arguing that global investors would look past geopolitical tensions and that opportunities had been amplified by other organisations avoiding the region or slowing their plans.
That optimism comes even as the US-Israeli war in Iran has entered its third month. The conflict has drawn in neighbouring countries, including the United Arab Emirates, and sparked an escalating energy shock, fuelling concerns about inflation and the health of the global economy.
US President Donald Trump last week cast a pall over fragile hopes for a resolution to the war, stating that the ceasefire with Iran was “on massive life support”.
Still, Richard Schimel, the co-founder and co-chief investment officer of hedge fund Cinctive Capital, said his firm had rented an office in Abu Dhabi at the beginning of March and that he had a multiyear plan for expanding in the region. Schimel plans to visit again later this month.
“There are people who will run, and there are people who lean in,” he said. “I’m one of the people who’s leaning in. To be honest, it hasn’t even been a question for me.”
The Middle East has become a hotbed for fundraising in recent years, with Deloitte forecasting last year that the Gulf’s sovereign wealth funds could reach $18tn by 2030. Some investment firms have seen establishing offices in the region as a way to build name recognition and attract new capital from the world’s deepest pockets.
State Street’s Ambrosius said that while Middle East investors had in the past sought investment opportunities overseas, “they clearly now are very actively approaching global investors to consider investments in-region”.
“We believe that we will now see also an [evolution] of the capital markets,” he added. This was especially true in Saudi Arabia, where “for a long time they were only exporting capital”.
Still, the war has led some firms to reconsider earlier ambitions to expand in the Middle East, with executives saying they were relieved that they were not already present in the region when conflict erupted.
One asset manager told the FT last month that they had put early conversations on hold about entering the Middle East. Another macro hedge fund manager said they had previously considered opening an office in Dubai, but had not gone ahead with the plans even before the war.
“We’ve thought about it, but I’m glad I don’t have one at the moment,” they said. “Everyone in that region is totally spooked because Iran has all these cheap drones that can inflict some pretty heavy damage.”
An executive at another large asset manager said some firms would think twice given the added security considerations.
However, “I don’t think that the security situation is something that would cause me to revisit our plans,” he said. “I’m quite bullish about the region. I could see us expanding in the Middle East.”
Oliver Berger, State Street’s interim head of Europe, the Middle East and Africa, said he had recently had to take a flight and a further five-hour drive to reach Kuwait.
“The reaction of clients was very positive,” he said. “Some said that they hadn’t seen a visitor for the last six weeks into Kuwait, because obviously it’s not easy to get there.
“But we feel that is creating opportunity for us [as others pull back]. We feel we understand the region.”