Gulf SWFs are edging out the old guard, and bringing in new expat talent

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changing of the guard

Some firms are edging out the old guard

If you’re an expat private equity professional looking for a position in the Middle East, sovereign wealth funds (SWFs) continue to offer a breadth of new roles. However, as new blood is brought in, an increasing number of the old guard are being forced out.

The recruitment spree by the Abu Dhabi Investment Authority in private equity is well-known – earlier this year, it announced plans to recruit 45 private equity professionals and last month brought in Colm Lanigan has head of principal investments. However, headhunters tell us that a large number of other Gulf sovereign entities are also hiring for private equity including the Qatar Investment Authority, the Emirates Investment Authority, and the Investment Corporation of Dubai.

Despite the recruitment sprees within Gulf sovereign entities, there have been some high profile departures in recent months. Alex O’Cinneide, head of principal investments at state-backed fund manager Masdar Capital in Abu Dhabi left in August after over four years at the firm.

Meanwhile, sources tell us that David Fitzgerald, head of private equity at the Emirates Investment Authority, has now left the firm and that Samir Assaad, head of private equity at Invest AD is due to depart next month. Neither organisation returned our requests for comment.

Sovereign wealth funds in the Gulf have long held ambitions to attract international talent, with recruitment teams regularly dispatched to the likes of London, New York and Singapore in an attempt to convince senior financial executives to move to the Middle East. This year, a number of high profile recruits shows that they’ve been more successful, but this is creating some disquiet in the ranks, suggest local headhunters.

“There are still more private equity professionals moving into sovereign wealth funds than exiting, but there’s a feeling that some of the old guard are being squeezed out,” says one headhunter who declined to be named. “Five years ago, it was a struggle to convince good people to move to the region, but now most SWFs have the pick of the best people.”

Any one leaving the sanctity of a SWF would have few options available to them elsewhere in the region currently. Recruiters tell us that the region’s largest player, Abraaj Capital, is only hiring “very selectively” after acquiring Aureos Capital earlier this year, Bahrain-based firms like Arcapita and Investcorp are still struggling, while smaller companies such as Gulf Capital and Citadel are not indulging in much hiring.

Compensation arrangements for private equity professionals in Gulf sovereign entities are not conventional and also make retention more difficult. Carried interest is not a common feature, even at the senior ranks, with firms instead favouring relatively high base salaries, cash bonuses and then bonuses that are squirreled away for up to five years before being paid in an attempt to tie senior staff in, according to recruiters.

Base salaries for managing director level private equity professionals vary greatly, coming in at $250-500k, according to headhunters. However, expat packages – everything from healthcare, to school fees, generous expenses and housing allowances can add to the basic salary substantially.

A brief insight into the pay practices at ADIA, for example, showed a bias towards fixed pay: “Our compensation program has always had a smaller variable component than many investment institutions but a greater emphasis on fixed pay and various other benefits,”  the late Sheikh Ahmed Bin Zayed Al Nehayan, former managing director at the SWF, said in a 2010 interview.