Wall Street Firms Bolster Gulf Teams to Tackle Wartime M&A Surge

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To be sure, significant regional challenges remain, including attracting talent. Many bankers, traders and executives who temporarily relocated after Iranian missiles targeted the region have returned, but uncertainties persist. Negotiations between the US and Iran have been hamstrung by contentious issues and repeatedly interrupted by tit-for-tat attacks.

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“There’s definitely been a shift in the tone,” said Gregory Agius, Switzerland-based chief executive of Agius & Partners, a recruitment firm that specializes in finance and private banking. Low taxes, growth, lifestyle and concentration of capital in the whole region remain attractive draws, but candidates are more selective, he said.

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“Now it’s a physical security choice, and that changes everything,” according to Agius. “Employers need to be sharper on compensation, relocation support, and long-term focus.”

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The war has also impacted specific pockets of dealmaking, including new share sales. Several initial public offerings have been delayed or canceled in the region after the war, with shareholders concerned that geopolitical volatility could impact trading performance. 

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And it’s hurt dealmaking activity in areas like construction, retail and hospitality, according to George Traub, managing partner at Lumina Capital Advisers. Still, he said, M&A in strategic sectors continues, “some with increased urgency,” in critical fields like food security, power, infrastructure services, logistics and defense that require larger deal sizes, cross-border financings and structuring.

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Weeks into the war that began when Israel and the US attacked Iran and triggered retaliation from Tehran, some Wall Street executives acknowledged “near-term headwinds” facing the region. Still, many lined up to offer support and bet on Gulf governments using their oil wealth to play a bigger role on the global stage. “Our clients’ ambitions across the region haven’t changed,” Goldman Sachs Group Inc. Chief Executive Officer David Solomon told Bloomberg News at the time.

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Indeed, Middle Eastern investors have continued to deploy billions of dollars across sectors. Gulf wealth funds have committed a record $53.9 billion so far this year, half of which went to the US, followed by China and the UK, while technology was the most popular sector, according to Global SWF Managing Director Diego Lopez.

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“The ranking of most active funds was topped once again by Mubadala, which invested $15.2 billion at group level,” Lopez said. “The rest of Gulf 7 funds showed no sign of slowdown either despite the Iran War.”

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Gulf wealth funds, which together oversee assets worth close to $5 trillion, have long been key backers of global deals. Over the years, in times of financial turmoil, these investors have often stepped in as bankers of last resort. This time around, with conflict at their doorstep, regional governments have also unveiled a swathe of plans to bolster capabilities across key areas.

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The UAE, for instance, is working on a plan to try to end its dependence on the Strait of Hormuz. At the heart of the UAE’s plan is an expansion of its eastern ports that sit outside the critical chokepoint on the Gulf of Oman coast. Meanwhile, Abu Dhabi’s L’imad Holding is joining local and global partners in an investment venture targeting infrastructure projects worth $30 billion. 

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Over in Saudi Arabia, Aramco executives have lined up the most ambitious privatization plan in the company’s history, driven by a desire to shore up the balance sheet — the deals are likely to eventually raise as much as $35 billion, Bloomberg News has reported. 

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And in Kuwait, some of the largest global investors including BlackRock Inc.’s Global Infrastructure Partners and Brookfield Asset Management Ltd. are vying for a $7.5 billion stake in the state-oil firm’s pipeline network.

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Two months into the war, Moelis & Co. CEO Navid Mahmoodzadegan was already touting a “return to normal” in the Middle East, where the firm has deep ties to regional governments and is an influential force in dealmaking. 

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“There’s a real opportunity when we get on the other side of this to get to a new Middle East,” he said. 

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—With assistance from Thomas Hall.

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