Investcorp President: New Investment Trends in the GCC to Determine How an Estimated $10 Trillion of Wealth will be Deployed over the Coming Decade
Investcorp’s President and COO, Gary Long has predicted that several emerging investment trends will shape how an estimated $5 trillion to $9 trillion in cumulative GCC oil revenue generated over the coming decade will be invested.
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 $800 billion. 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.
About Investcorp
Founded in 1982, Investcorp is a leading provider and manager of alternative investment products with more than $15 billion in assets under management as of December 31, 2007. The firm, which has offices in New York, London and Bahrain and is publicly traded on the London Stock Exchange (IVC) and Bahrain Stock Exchange (INVCORP), has five lines of business: private equity, hedge funds, real estate, technology investment and Gulf growth capital.
Investcorp’s current private equity investments include: Berlin Packaging, a leading supplier of custom and stock rigid packaging in the USA; Icopal, the world's leading producer of roofing and waterproofing membranes; Moody International, a global provider of technical and inspection services and management systems; and Armacell, a leading global manufacturer of engineered foams. Past private equity investments by Investcorp include: Tiffany & Co., Gucci, Prime Equipment, Carter's, Simmons, Leica, Jostens and APCOA. Further information on the firm is available at www.investcorp.com.
