Gaining ground in the GCC: asset managers eye up the region’s capital raising opportunities
What’s shaping the GCC’s growing appeal to institutional and retail investors?
Eager to diversify their fundraising pools outside of North America, Europe and Asia, a number of our asset manager clients are increasingly scouting out the Gulf Cooperation Council (GCC) markets for new sources of investment. Not only does the GCC have a vibrant capital markets, but it also boasts a sizeable – and sophisticated – institutional and retail investor community.
Key takeaways
- Global asset managers are pivoting towards the GCC as they look to diversify their fundraising channels.
- Retail wealth in the GCC is also expanding and could provide asset managers with yet another distribution opportunity.
- On the institutional side, the GCC’s SWFs, its growing pension fund industry, and burgeoning Islamic financial institutions are enticing asset managers into the region.
GCC: Grabbing the attention of Asset Managers
Despite the volatility gripping global markets, the GCC has proven to be remarkably resilient. Unlike many other economies which are struggling to deal with exogenous headwinds, the GCC is actively thriving, with the International Monetary Fund (IMF) forecasting that the region’s Gross Domestic Product (GDP) will grow by 4.3 per cent in 2026.
Complementing the GCC’s strong macro fundamentals, its investor base is both deep and diverse, with many allocators keen to reduce their historic dependencies on the commodity-centric domestic markets – in favour of building up exposures to global asset managers.
Just as GCC investors are looking to expand their portfolios, capital raising has become increasingly challenging in North America, Europe and Developed Asia. As a result, more of our global asset manager clients are beginning to rotate towards the GCC.
Who are the investors?
The GCC’s sovereign wealth fund (SWF) market is the biggest draw for clients, and it is easy to see why – for starters, the region’s SWFs collectively account for 40 per cent of all global SWF assets.
According to Deloitte, GCC SWFs control USD12 trillion in Assets Under Management (AUM), and that is projected to grow to USD18 trillion by 2030. Not only are these SWFs rich in cash, but they are also active investors, deploying USD82 billion in 2023, and another USD55 billion in the first nine months of 2024, corresponding to two thirds of all new SWF activity.
It is not just SWFs who are tempting asset managers to the GCC’s shores.
Our global asset manager clients are also paying close attention to pension fund reforms being enacted in certain GCC markets.
Some GCC countries are shifting away from the traditional End of Service Gratuity (ESOG) set-up, whereby employees receive a lump sum of cash from their employers upon retirement, and are instead embracing the Defined Contribution (DC) model.
“Five years ago, the Dubai International Financial Centre (DIFC) unveiled the DIFC Employee Workplace Savings plan, introducing a DC scheme in place of the ESOG. Other markets in the GCC, including Qatar and Oman, are reportedly exploring something similar,” notes one industry expert in the region.
Should more GCC markets adopt DC-style pension fund reforms, then this will open up all sorts of fundraising opportunities for asset managers.
Islamic financial institutions are also high on asset managers’ radars.
Data from Crisil Greenwich Coalition revealed the global Islamic finance industry’s assets reached USD5.4 trillion in 2024 – of which 50 per cent is concentrated in the GCC. It added the Islamic finance sector’s assets are projected to hit USD9.75 trillion by 2029 – a compound annual growth rate (CAGR) of 10 per cent.
“Distribution channels have expanded beyond foreign banks to include local and Islamic financial institutions, which are increasingly recognising the strategic importance of wealth management in serving their client base,” says Amar Mehta, Head of Retail, Gulf, Eastern Mediterranean & Africa, Franklin Templeton.
Retail investors in the UAE and Saudi Arabia – such as wealth managers, private banks, HNWIs and the mass affluent – are another target market for asset managers.
“Saudi Arabia is often seen as the crown jewel in the GCC, not just because of its sheer wealth and the clout of its SWFs, but because of the size of its domestic population. People’s wealth management requirements in Saudi Arabia were historically supported by local players, often with local solutions. Now, these asset allocators are starting to look for more international solutions,” comments an industry expert.
Looking ahead
Attracted by the GCC’s deepening and increasingly sophisticated investor base, global asset managers are stepping up their presence in the region. As institutional capital pools continue to scale and retail wealth expands, the GCC is no long a peripheral allocation story – it is fast becoming a core component of global fundraising and distribution strategies.
Many leading global asset managers recognise the region as offering amongst the most attractive rates of growth in the world – namely the opportunity of supporting the greatest concentration of Sovereign Wealth.Jean-Marc LaventureHead of Investor Sales Middle East, FSS, Standard Chartered.
This is the first in a series of articles exploring the evolving GCC funds landscape.
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