UAE sovereign wealth funds hiring in-house to cut costs

Sovereign wealth funds in the UAE are increasing in-house recruitment and consolidating their holdings under larger private equity players to cut costs, according to law firm Baker Baker & McKenzie.

Speaking to reporters in Dubai earlier Monday, Baker & McKenzie head of UAE corporate practice Borys Dackiw said some sovereign funds were still engaging in “very active buying” despite expectations that low oil prices would force them to cut back.

He said instead funds were changing their model to reduce the “huge fees” they were paying to external managers, citing conversations with a sovereign fund in Abu Dhabi.

“The sovereign funds have quite a broad investment base in terms of many different private equity funds. They seem to be consolidating those into a few larger private equity players,” he said.

Funds in the UAE capital were also considering hiring managers to oversee their investments in-house, he added.

“They are already trying with the idea can we do better by recruiting the expertise internally.”

Dackiw’s remarks suggest Abu Dhabi funds are taking a different approach to Qatar Investment Authority.

Reuters reported earlier this month that the Qatari fund was reducing its exposure to Europe and spreading its investments across more external managers, particularly in Asia and the US.