Hong Kong-based hedge fund Infini Capital Management has opened an office in Abu Dhabi after receiving in-principle approval from the Abu Dhabi Financial Services Regulatory Authority (FSRA) to locate there, the company said. The company said this will set it up to become Asia's first hedge fund manager in the Abu Dhabi Global Market, an international financial center and free zone.
Tony Chin, Founder, CEO and Chief Investment Officer of Infini Capital, said: “There has clearly been a lot of press about deepening investment between Greater China and the Middle East. We are monitoring these closely to leverage our expertise in both markets.”
For example, dual-listed companies in Hong Kong and the Middle East could present relative value and event-driven investment opportunities, he said.
Last September, the Hong Kong Stock Exchange added the Saudi exchange to its list of authorized stock exchanges, making its shares available for investment by local funds and individual investors.
Middle East sovereign wealth fund to diversify investments in China in 2024
Middle East sovereign wealth fund to diversify investments in China in 2024
Infini Capital is also keeping an eye on new listings, equity and fixed income activity in the Gulf Cooperation Council (GCC), which is comprised of Saudi Arabia, Kuwait, the United Arab Emirates (UAE), Qatar, Bahrain and Oman.
The hedge fund manager has raised US$1 billion for a fund to take advantage of the latest opportunities and expects its Abu Dhabi workforce to grow to more than 10 in the next 12 months.
Arte Capital, an asset management company headquartered in Hong Kong, also shares Mr. Chin's positive opinion. Last year, the company opened an office in Al Hatem Tower, the same building as Infini Capital. In November last year, Arte received a financial services license from the FSRA to carry out regulated activities.
“We see a unique opportunity to strengthen ties between China and the countries of the Middle East,” said Ethan Chan, founder and chairman of Arte. “Asset managers like us are well-positioned to connect resources, enterprises and capital between the two regions.”
In November, Arte launched a $1 billion fund for Chinese companies expanding into the Middle East, with approval from government agency Abu Dhabi Investment Office (ADIO). Zhang said the money for the Arte China-Arab Strategic Fund comes from Abu Dhabi and China.
ADIO announced at the time that non-oil bilateral trade between the UAE and China will increase by 18% to USD 72 billion in 2022.
“We have assembled some very high quality portfolio companies in new energy, new materials, media and new energy vehicles,” said Chan, who said his company expects to generate about $500 million in the near term. He added that he plans to invest in the company and secure the following co-investors. As a sovereign wealth fund or family office, we match the fund's commitment in each transaction.
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Munir Khan, partner and head of the Middle East region at law firm Simmons & Simmons, said the Middle East, and the GCC in particular, has amassed enormous wealth from oil and gas, which trickles down into the economy and creates further private wealth. He said that it is useful for creating.
“There is a lot of wealth being created in the Middle East, both at the government level, institutional level, and private level such as family offices, and hedge fund managers will benefit when raising capital,” he said. “We have seen a huge increase in asset managers coming from the US, Europe and Asia on marketing visits and looking to raise money here.”
The additional funding route could help Hong Kong- and China-based fund managers at a time when the world's second-largest economy faces a slowdown. “If you have difficulty raising capital in the market, you may be forced to look elsewhere,” Khan said.
Another factor influencing fund managers' expansion into the Middle East is talent.
Khan said the rapid growth of multi-strategy, multi-manager platforms globally is creating a war for talent among portfolio managers.
“This location further opens up a new talent pool, particularly from Europe, with many top talent from London and Paris looking to relocate to Abu Dhabi,” said Infini Capital's Chin.
Khan said a low tax environment, affordable cost of living and accessible visa regime are incentives for talent in the industry.
He said high earners such as portfolio and hedge fund managers were concerned about higher taxes, but the UAE had no personal income tax and regulated investment managers were exempt from corporate tax.
The Hong Kong-based fund manager's foray into the Middle East is still in its infancy, but it is growing. However, there are challenges within the friendly relationship between the two regions.
“Global headwinds and US-China tensions are having an impact.” [the Middle Eastern investors’] We are interested in investing in China,” said Arte's Zhang. “It's not that simple.”
But it's also not insurmountable. “Asset managers need to suggest the right investments and help investors make money, so they can take advantage of opportunities in the Middle East market,” he said.
