U.S. private equity firms and hedge funds are seeking out investments from sovereign funds as a quick way to raise money. Such government owned investment vehicles based in the fast-growing Middle East and China are cash rich, and also view such investments as an easy way to establish foreign partnerships.
Recent examples of foreign investment in U.S. private investment funds have been growing. Carlyle Group said in September it was selling 7.5 percent to an investment unit of the government of Abu Dhabi for US$1.35 billion. Recently Apollo Management, founded by Leon Black, announced it sold 9 percent of itself to the Abu Dhabi Investment Authority (ADIA). The private equity firm Blackstone Group sold nearly 10 percent of the firm to an arm of the Chinese government just before the firm's June IPO. The China stake gave Blackstone a key partner in its Asian expansion and raised an additional $3 billion on top of the $4 billion it raised through the IPO.
As record oil prices prompt oil wealthy investors to diversify their portfolios, more Middle Eastern money has been headed to U.S. private equity and private investment firms. ADIA is among the largest government investment authorities in the world and is responsible for investing all Abu Dhabi's state oil revenues and assets. Standard Chartered Bank in Dubai estimates ADIA manages between US$450 billion and US$500 billion.
Source: Reuters, New York
