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Saudi Arabia Set to Back $2 Billion Brookfield Mideast Fund

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Saudi Arabia Set to Back $2 Billion Brookfield Mideast Fund
 
Nicolas Parasie and Dinesh Nair
Wed, October 30, 2024 at 7:57 AM EDT 3 min read
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(Bloomberg) -- Saudi Arabia will back Brookfield Asset Management Ltd.’s new $2 billion Middle East fund, giving the Canadian investment firm extra financial firepower to pursue deals in the oil-rich Gulf region.
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The Public Investment Fund will anchor Brookfield Middle East Partners, which will invest in businesses in Saudi Arabia and the wider region, according a statement Wednesday. At least half of the fund will be allocated to deals within the kingdom and to international firms looking to expand locally — a move aimed at attracting foreign direct investment.

The memorandum of understanding was unveiled at the kingdom’s annual investors confab known as the Future Investment Initiative, confirming an earlier report from Bloomberg News. The deal strengthens ties between Brookfield and the PIF, which manage about $1 trillion in assets each.
The new fund will target buyouts, structured solutions and other investment opportunities across a range of strategic sectors.

“This MoU represents a step toward achieving PIF’s vision of attracting global capital and expertise to the region, while facilitating knowledge transfer and capacity-building within Saudi Arabia,” said Yazeed Al Humied, who is one of the fund’s two deputy governors and runs its Middle East and North Africa unit.
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The PIF is Saudi Arabia’s go-to vehicle to carry out the ambitious domestic reform agenda of the country’s Crown Prince Mohammed bin Salman. It has been a prolific investor in recent years across the globe, although its focus has recently shifted to domestic markets where it’s the driving force behind mega-projects such as the $1.5 trillion Neom city development.
“People used to come to us and ask for money,” the fund’s Governor Yasir Al Rumayyan said Tuesday on a panel at the FII. “We are now seeing a shift from people wanting to take our money to people wanting to co-invest.”

The partnership marks the latest example of a foreign firm raising a Middle East-focused fund. Goldman Sachs Group Inc. is working on one, Bloomberg News has reported, while the PIF has committed $5 billion to BlackRock Inc. for local investments.
Last year, Brookfield said it would open an office in Riyadh, the latest international firm to set up shop in the kingdom. It’s already one of the Middle East’s most active and largest institutional investors with about $12 billion invested in recent years, mostly in the United Arab Emirates.

Until now, those investments were done through its global funds. The firm’s recent regional deals include investments in a major private school operator and a regional payments firm. It also sold a stake in the tallest office tower in Dubai’s financial district earlier this year.

Other international asset managers are also seeking to raise dedicated funds for the region. BlackRock Inc. is seeking $1 billion for a new Middle East infrastructure and private equity-focused fund with some of the region’s largest sovereign wealth funds, Bloomberg News reported in May.
(Updates with details from statement)
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