Asian family offices eye Saudi investment opportunities
Family offices in Hong Kong and Singapore are seeing attractive investment opportunities in the Middle East, particularly in agriculture and technology in Saudi Arabia.
Several Hong Kong family offices are exploring setting up representative offices in Dubai to tap emerging opportunities in the region, according to executives.
“Now there are a lot more Hong Kong and Chinese companies wanting to go [to the Middle East] because they see [Chinese] president Xi [Jinping] and [Hong Kong] chief executive [John] Lee have been there," Patrick Tsang, chairman of Hong Kong-headquartered single family office Tsangs Group, told AsianInvestor.
"That’s been very, very beneficial for us.”
Tsangs Group
Tsangs Group opened its Dubai office in early 2022 to tap early-stage capital investments across the Middle East in fintech, agricultural technology, clean energy and food technology, the latter involving an ambition to support farming.
In December 2022, not long after Xi resumed overseas state visits following China's lifting of Covid-19 control measures, the Chinese president embarked on a three-day visit to Saudi Arabia to meet with heads of state across the Middle East.
The trip was followed by the signing of investment agreements worth billions of dollars between Saudi Arabia and China in fields including clean energy, information technology and infrastructure, in both public and private sector.
Shortly after that, Hong Kong leader John Lee visited Saudi Arabia and the United Arab Emirates in February this year, a trip that led to cooperation and investment agreements.
On June 11, Tsangs Group signed a memorandum of understanding with Saudi Arabia's Ministry of Investment to facilitate business collaboration.
“We're going to continue spending a lot more time and resources in the region. Overall, I think the opportunities in the Middle East are greater than in Southeast Asia because there's also the geopolitical support from president Xi and chief executive Lee,” Tsang said, also noting the strong growth potential and access to capital in the region.
SAUDI POTENTIAL
Within the Middle East, Tsang said he saw more opportunities in Saudi Arabia than in the UAE, thanks to the country's fast-growing economy, significant growth potential and open-for-business government.
“They will surpass the UAE in the next 5-10 years,” Tsang said.
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Echoing Tsang's views, Tuck Meng Yee, founder and chief investment officer at Singapore-based single family office JRT Partners, said he thought Saudi Arabia offered more interesting investment opportunities for family offices, with a bigger capital pool and a larger domestic market.
JRT Partners specialises in alternative investments. The family office, despite having no Saudi Arabia exposure yet, is interested in agriculture and relevant technology, and services imported into the region, as well as platforms to enable such imports.
"The Middle East has been a very good market for Australian agriculture produce such as sheep," Yee told AsianInvestor.
Even so, Yee noted that for regional opportunities, it would make sense to use Dubai as a base.
Although JRT Partners has no plans to set up an office in the Middle East in the near future, Yee said Dubai would be the first step if it were to happen.
CULTURAL DIFFERENCES
Agreeing with Yee, Tsang noted that the Middle East differed from financial hubs such as Hong Kong, New York and London, which were all very developed, meaning that investors didn’t have to maintain a constant physical presence.
“We can just get good lawyers, sign a contract, and it's done. But in the Middle East, like in China, it has to be relationship-driven," Tsang said.
"So, I think having experience in China helps, because then you understand that's the culture. You need to eat, drink, talk and do whatever you need to be patient and develop the relationship.”
Dubai’s chief executive of economic development at Dubai Economy and Tourism, Hadi Badri, visited Hong Kong in April to promote business opportunities in the emirate.
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Badri told AsianInvestor that some family offices he had met with saw the benefits and opportunities of having multiple offices around the world, or twin offices in both Hong Kong and Dubai to cover different markets from cities that don't overlap in terms of accessibility and investment opportunities.
“In a global environment which remains uncertain or unclear, the markets that are expected to perform, where there will be a higher number of attractive investment opportunities, are going to be the markets that Hong Kong and Dubai cover,” Badri said.
“So, family offices are excited about that and see the opportunity,” he added.