(Bloomberg) -- State Street Corp., which manages $4.4 trillion globally, is expanding its presence in the Middle East to tap into the growing pools of wealth across family offices and hedge funds that have flocked to the region.
The firm is building out a Dubai-based team of investment advisors and hiring a Riyadh-based team of portfolio managers, Oliver Berger, the head of the strategic growth markets unit said in an interview. The expansion is underpinned by State Street’s estimates that show financial assets in the region are set to grow to $9 trillion by 2027, from about $6 trillion currently, he said.
Last month, the firm hired Karine Kheirallah as head of investment strategy and research in Dubai, along with Georges Hanna as head of its Saudi Arabia business. It’s also applying for a regional headquarters license in Saudi Arabia that’s essential to work with government entities in the kingdom, and expects to get the approval in the coming months.
“Very few places in the world are moving at the pace we see in this region, so we see it as pivotal to our growth,” said Berger.
The United Arab Emirates has attracted a string of hedge funds and family offices of billionaires on the back of its low taxes, business friendly environment and convenient location straddling multiple time zones. Meanwhile, Saudi Arabia is ramping up efforts to attract foreign capital and firms amid its ambitious economic overhaul.
“Traditionally our focus has been on central banks and sovereign wealth funds in the Middle East, now we see pension funds developing, the growth of family offices and financial institutions including banks, fund managers and hedge funds,” Emmanuel Laurina, head of Middle East and Africa said in the same interview. “We’re increasingly looking at these other client segments.”
Sovereign wealth funds in the Gulf region, which control nearly $5 trillion, are increasingly asking big money managers to offer concessions in return for cash.
BlackRock Inc. secured a $5 billion pledge from the Saudi wealth fund in April to build a Riyadh-based investments team. Goldman Sachs Group Inc. is looking to raise a Middle East-focused fund, while Brookfield Asset Management Ltd. is exploring raising separate pools of capital for the region, Bloomberg News has reported.
“We’ve recognised the importance of providing client coverage from the region,” said Laurina. “Every change in footprint we make is in response to client feedback, and clients here want more things done locally.”
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State Street is also building out its local portfolio management and research team as international clients increasingly look to invest in the Middle East, he said. “With growing weights in equity indexes, more initial public offerings and an increase in bond issuance, we’re getting positioned to capture increased allocations to this region.”
(Adds comment in 9th paragraph. A previous version of the story was corrected to amend the figure for financial assets in the region.)
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