By Prinesha Naidoo.
Ninety One Plc, South Africa’s biggest asset manager, sees “huge” opportunities in Middle Eastern credit markets as the region diversifies away from oil and banks near lending limits.
“The diversification away from non-oil revenues lends its way to much deeper capital markets as we see that diversification come through in every field,” Victoria Harling, Ninety One’s chief investment officer for the Middle East, said in a Bloomberg Television interview in Riyadh Tuesday. “You can see the banks that have traditionally really owned the credit space actually reaching limits, which paves the way for investors like us to fill in the gaps.”
Ninety One’s push is part of a wider shift as financiers and Wall Street giants ramp up presence in the Middle East with an eye on the region’s sovereign investors that control assets worth trillions of dollars. Goldman Sachs Group Inc. is jockeying for a $10 billion mandate for its asset-management arm from Kuwait’s wealth fund.
Bain & Co sees private-market assets under management reaching $65 trillion within a decade – three times more than in 2012.
Still, concerns are mounting about the sector following the collapse of US firms First Brands and Tricolor Holdings. Those cases prompted JP Morgan Chase & co chief executive officer Jamie Dimon to warn that “when you see one cockroach, there are probably more,” while the Bank of England warned of parallels between the $1.7 trillion private credit boom and the subprime debt crisis.
While there’s been some deterioration in credit lending standards globally, the shift to private credit has led to public credit becoming more resilient, Harling said.
The Cape Town-based Ninety One recently opened offices in Saudi Arabia and the United Arab Emirates to take advantage of growth in the region’s fixed income and equity markets. It also sees scope to capitalise on its expertise in mining, she said.