Talal Al Zain — former CEO of Bahraini sovereign wealth fund Mumtalakat — has been chosen by Pinebridge Investments to take the firm into the Middle East. But is now the right time to invest?
When PineBridge Investments were looking for the man to lead their charge into Middle Eastern markets, there can’t have been many more qualified individuals than Talal Al Zain. A familiar figure in Gulf financial circles, Al Zain’s resume is impressive. Back in the 1990s, he was a managing director at Investcorp, and then he took on the top job at Bahraini sovereign wealth fund Mumtalakat, managing over $10bn worth of investments, and chairing Gulf Air at the same time.
PineBridge finally got their man in March last year. Not only is Al Zain heading up the New York-based firm’s regional operations, but he’s also co-head of alternative investments globally at the same time. And while it’s only been three years since US insurance giant AIG hived off PineBridge to Hong Kong-based Pacific Century Group — headed up by Richard Li, son of Li Ka-shing, one of the planet’s wealthiest men — the Middle East stands out as one of the few emerging markets in which the firm does not have much of a presence.
This Sunday, with the launch of a new Middle East and North Africa headquarters in Bahrain, Al Zain is hoping to change all that. Relaxed and urbane, he seems pretty confident that PineBridge’s faith in him is well-placed.
“When I was approached by PineBridge, it had a presence in 33 countries, thirteen of which were emerging markets — including Latin America, Africa, Asia and Eastern and Central Europe — but the only region in which we didn’t have a strong presence was the Middle East,” he says. “The closest we had was an office in Istanbul for private equity, and a small office in Dubai that did distribution.”
The immediate plan, for Al Zain, is to build up the local workforce. He is planning to more than double the Bahrain headcount to roughly 40, while switching the Dubai office to Abu Dhabi. However, PineBridge’s aggressive expansion into the region comes at a time of confusion in the local finance industry, with Western investment banks appearing to be largely retrenching.
Two French banks, Societe Generale and BNP Paribas, have sold off their Egyptian businesses to Gulf lenders, while Citigroup, Credit Suisse and Nomura have all pared back their teams in the region as fees from traditional investment banking activities have slumped. Elsewhere, however, private banking is making a comeback, as lenders renew their focus on the Gulf’s many high net worth individuals.
Meanwhile, alternative investments — the activity on which PineBridge’s operations in the region will hinge — appear to be back on the march. According to McKinsey, global alternative assets under management more than doubled between the beginning of 2006 and the end of 2011 to more than $6.5 trillion. Private equity in the MENA region is also making a gradual return, although it is nowhere near back to its high point of $4.1bn worth of deals
In 2011, the figure only reached a miserable $237m, according to Dealogic, with the average deal size dropping from $172m to $30m. But in the first half of 2012 alone, that $237m figure had more than doubled.
More importantly, however, private equity exits in the region rose to 72 in 2011, from a pitiful seven in 2009. And equity funds — or dry powder, as they are known in the industry – have built up to roughly $5bn, according to the MENA Private Equity Association. So does Al Zain believe that the long private equity drought is now over?
Article continued on next page