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Middle East investors eye China new economy
Surging interest by Saudi, UAE, Kuwaiti institutions seeking opportunity, diversification
Janette Chen 13 Oct 2023

China has become an increasingly attractive destination for global investors, with asset owners from the Middle East, in particular, seeking diversification opportunities as demonstrated by a wave of high-profile delegations from this region visiting the country and numerous prominent Middle East sovereign wealth funds opening offices in the world’s second-largest economy.

The Ministry of Investment of Saudi Arabia is planning to open an office in sourthern China’s Greater Bay Area (GBA) and thereby support the Saudi Vision 2030. Beginning this year, the GBA’s city of Shenzhen has seen a surge of Middle Eastern institutional investor interest. 

Shenzhen, one of the region’s megacities, along with Guangdong, and China’s southern technology hub, has recently welcomed a delegation of more than 10 people from the United Arab Emirates (UAE), the Middle East’s dominant finance centre. The delegation was led by H.E. Abdulla Bin Touq Al Marri, a member of the UAE’s cabinet and its minister of economy.

And Shenzhen Venture Capital (SVC), the city’s venture capital leader, has intensified its efforts this year to engage with Middle East investors. Earlier in the year, Zuo Ding, SVC’s president, led a delegation to Saudi Arabia, the UAE and Kuwait, during which it met with many renowned sovereign funds, chambers of commerce and financial institutions to discuss opportunities.

SVC, as of July, has 446.6 billion yuan (US$61.2 billion) of assets under management (AUM) and invests in 1,420 companies across 17 countries worldwide. The company, headquartered in Shenzhen, often referred to as China’s Silicon Valley, has established a strong presence in sectors like financial and information technology, new energy, and intelligence and education.

Correspondingly, the UAE, which is committed to economic growth through new economy sector development, has rolled out policies to attract enterprises in this sector. This alignment of interests between the two parties has solidified discussions.

Earlier in April this year, the Mubadala Investment Company, the sovereign wealth fund of the UAE’s capital city and one of the leading institutional investors in the Middle East, also visited Shenzhen and is actively exploring partnerships with SVC. During the visit, the sovereign fund expressed its willingness to continue to increase investment in China and, at the same time, attract more Chinese companies to the Middle East to further promote industrial development in the region.

Last month, the sovereign fund, which has global AUM exceeding US$276 billion, opened its Beijing office. Located in the core area of ​​Beijing’s central business district, the fund currently has a team of about 10 people in Beijing responsible for direct and fund investment in China. It has been active in many Chinese projects, such as the initial public offering of online fast-fashion group Shein in May this year.

As well, the Abu Dhabi Investment Authority, which has AUM of US$853 billion, set up a localized team in Beijing in 2021. Its investment in the Chinese market has increased, with the China portion of its AUM growing from 4.5% at the end of 2019 to 22.9% in the first quarter of 2023. And, in June of this year, CYVN Holdings, a subsidiary of the authority, made a strategic investment of approximately US$1.1 billion in Nasdaq-listed, Chinese electric vehicle company NIO.

Other famous deals supported by Middle Eastern investors include those involving ByteDance, Jingdong Industrials and VSPN.

Other active Middle Eastern investors that have opened offices in China include the Kuwait Investment Authority with AUM of about US$800 billion, the Qatar Investment Authority with AUM of US$475 billion, the ​Public Investment Fund of Saudi Arabia with AUM of US$777 billion, and the UAE’s G42 Expansion Fund.

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