"West is not as bright as the East": Middle Eastern capital is experiencing a shining moment in the financial market.

The seventh conference of the Saudi "Future Investment Initiative," known as the "Desert Davos," will be held in Riyadh from October 24th to 26th this year.

According to insiders, due to the high demand for participation from global financial executives, each executive will be charged a fee of $15,000. The official estimate is that there will be a total of 5,000 participants.

Analysts point out that this indicates that the Gulf countries in the Middle East, eager to expand their global influence, are playing an increasingly important role on the world financial stage:

"Sovereign wealth funds in the Middle East have become popular ATMs for private equity, venture capital, and real estate funds that are difficult to raise funds for elsewhere in the world."

Fundraising for investment is facing the dilemma of "dim in the West, bright in the East," and the demand for Middle Eastern funds is increasing.

Peter Jädersten, founder of fundraising consulting firm Jade Advisors, said that now everyone who needs money wants to go to the Middle East, just like the gold rush in the United States in the past, because it is difficult to raise funds elsewhere.

Brenda Rainey, Executive Vice President of Bain & Company, which provides consulting services to private equity funds, admitted that fundraising has become increasingly difficult in the past 12 months.

Executives from private equity giants TPG, KKR, and Carlyle Group also stated that interest in the Middle East remains strong, while interest in other regions of the world is weakening.

For private funds that have locked in investor funds for many years, the demand for sovereign wealth funds in the Middle East has increased since last year when other sources of funds became tight.

Data shows that the Saudi Arabian Public Investment Fund (PIF), led directly by Crown Prince Salman, has increased its investment in the "investment securities" category, including private equity funds, from $33 billion in 2021 to $56 billion in 2022, an increase of 70%. Mubadala Investment Company, owned by the UAE government, doubled its equity investment to $18 billion last year.

At the same time, traditional supporters of the fund industry, such as pension plans and university endowments, are retreating, mainly due to the backdrop of rising global interest rates, which has caused losses in the largest components of their investment portfolios, stocks, and bonds.

According to PitchBook, a financial database provider for venture capital, private equity, and mergers and acquisitions, in the first half of this year, investors injected $33 billion into U.S. venture capital funds, less than half of the $74 billion in the same period in 2021. Another data provider, Preqin, found that fundraising for all private equity funds worldwide fell by 10% to $1.5 trillion in 2021 and is expected to continue to decline.

It has been reported that more and more funds are opening offices in the Middle East to facilitate easier access to investments.

These include Blackstone, Millennium Management, private equity firm CVC Capital Partners, the largest hedge fund startup ExodusPoint Capital Management, Bridgewater founder Ray Dalio's personal family investment office, and others. European companies Tikehau Capital and Ardian, as well as alternative investment management firm Pretium from the United States, among others.

Even Rajeev Misra, the financial guru who helped SoftBank Group raise over $6 billion for its latest venture capital fund from multiple Abu Dhabi sovereign wealth funds, is relocating from the UK to the United Arab Emirates. Tiger Global's venture capital division, which has repeatedly lowered its funding targets this year, has received public support from Saudi PIF while facing challenges elsewhere.

Since the outbreak of the COVID-19 pandemic, the investment patterns of Middle Eastern investors have undergone new changes: collaborating with professional managers and focusing on startups and opportunities in Asia.

According to the Middle East Institute, Middle Eastern Gulf countries have been actively promoting domestic construction projects and strengthening international strategic partnerships with other private equity firms and institutions, leveraging the massive cash income generated from the sale of oil and natural gas. They are also playing a more prominent role on the world stage.

According to their research, the number of sovereign wealth funds worldwide has steadily increased over the past twenty years, from 62 in 2000 to 176 in 2023, with assets under management (AUM) soaring from $1 trillion to $11.36 trillion. Sovereign wealth funds in the Asia-Pacific region (especially China) and the Middle East account for about four-fifths of the total assets of similar funds globally.

The Middle East Gulf region currently has about 20 sovereign wealth funds, collectively managing approximately $3.7 trillion. According to the Sovereign Wealth Fund Institute, the seven largest funds in the region have total assets exceeding $3.2 trillion, accounting for 40% of global sovereign wealth fund assets, mainly from the United Arab Emirates, Saudi Arabia, Qatar, and Kuwait.

Although sovereign wealth funds in the Middle East differ in terms of asset management scale, investment strategies, diversification approaches, missions and goals, and governance structures, they share at least two commonalities: their main source of funds is surplus income generated from the export of commodities such as oil and natural gas, and they operate under the guidance and supervision of the government or ruling family.

According to research, rising oil prices and ongoing market volatility are driving factors behind the windfall profits of oil and gas-producing countries in the Middle East Gulf. "The financial firepower brought about by high oil prices has translated into increased spending by sovereign wealth funds in the region."

According to Global SWF, an online tracking organization, sovereign wealth funds from Middle Eastern Gulf countries invested nearly $89 billion globally in 2022, double the previous year's figure, with $51.6 billion deployed in Europe and North America, while other investment focuses were concentrated in Asia.

(Note: The image in the original text is preserved in the translation) The top five sovereign wealth funds, consisting of the United Arab Emirates, Saudi Arabia, and Qatar, invested over $73 billion last year. The International Monetary Fund predicts that Gulf producers may receive an additional $13 trillion in revenue by 2026, bolstering their investment cash reserves.

According to research, since the outbreak of the COVID-19 pandemic, there have been significant changes in the investment patterns and destinations of sovereign wealth funds in the Middle East, mainly reflected in the following aspects: a shift towards alternative assets and "future industries," a surge of interest in global startups, a greater emphasis on co-investment in private equity and venture capital, and a search for investment opportunities in China, India, and Southeast Asia while maintaining holdings in Western assets.

Middle Eastern sovereign wealth funds now tend to invest in higher-profit (yet riskier) areas, such as private equity and listed stocks, and show strong interest in investing in technology and innovation-driven companies, as well as high-priority industries such as healthcare, logistics, renewable energy, broadband, and digital infrastructure. They hope to participate in "incubating new industries" and collaborate with international capital to target Asian assets.

Among them, Middle Eastern sovereign wealth funds have expenditure targets in various areas in Asia, including gaming and esports, integrated agricultural enterprises, renewable energy, as well as consumer technology and data services.

Analysts have summarized that Gulf sovereign wealth funds are no longer satisfied with being mere guardians of national wealth; they have become important financial resources to meet current and future needs, as well as increasingly important tools for exercising national political power domestically and internationally.

However, some have warned that a drop in oil prices could quickly lead to an economic downturn in the Gulf countries of the Middle East, as has been the case in previous energy cycles. Nevertheless, in the current environment, the Middle Eastern magnates who can say "I have food in my hands and I'm not worried" do indeed have greater influence and choices.