Chinese fund founders, grappling with the challenges facing U.S. dollar funds, are exploring new avenues for diversification, according to Chinese-language press. They aim to attract a broader range of limited partners (LPs) and reduce reliance on traditional U.S. dollar investors. The emerging market of the Middle East, with its considerable capital volume, has caught the attention of these Chinese general partners (GPs).
However, the Middle East poses its own unique set of challenges. Despite the region’s substantial capital volume, it has a limited number of LPs. The intricate relationships among the region’s prominent families and royalty can complicate efforts by some GPs to raise funds through a consortium approach. Differences in culture, language, and personnel backgrounds can directly impact decision-making processes and shape ideological perspectives.
The Middle East is a relatively insular region, with resources across various industries largely allocated. Foreign companies seeking significant growth within the region often need to establish robust ties with local resources. Such cooperation is heavily influenced by the region’s dominant powers.
The failure of SoftBank’s Vision Fund has prompted Middle Eastern LPs to approach China with caution. Since 2009, China has emerged as the largest trading partner in the Middle East and North Africa (MENA) region. However, investment from the Middle East, especially from sovereign funds, is disproportionately low, with less than 5% allocated to China. Furthermore, the proportion of Chinese capital in the overall index of the Middle East market remains relatively low.
The Middle East, a market with significant capital volume but a limited number of LPs, presents a delicate balance of relationships among several prominent families or royalty. This makes it challenging for some GPs to raise funds based on a consortium approach. Differences and divisions in culture, language, and personnel backgrounds directly impact decision-making and are reflected in the ideological realm.
Foreign companies expecting significant development within the region often need to establish strong ties with local resources. Such cooperation is heavily influenced by the dominant power within the Middle East.
