Liz’s view
This week brought a perfect encapsulation of the unsettled and century-defining dance for global capital dominance.
Abu Dhabi is hosting global billionaires and investors at a glistening seaside conference because it needs their money. Eight thousand miles away, billionaire investor David Ellison is counting on money from Abu Dhabi and its neighbors to press a hostile takeover of a Hollywood icon.
Twenty years ago, Western asset managers coming to Abu Dhabi would end meetings with Gulf sovereign wealth funds by saying, “this is how much we expect from you,” Khaled Al-Marri, CEO of real assets at Mubadala, the Abu Dhabi sovereign wealth fund, told me on stage at Abu Dhabi Finance Week. Now, he said, “we are co-architects of deals together.”
That shift reflects the reality that the UAE and, to an even greater degree, Saudi Arabia are no longer the bottomless pits of cash they once were. Low oil prices have squeezed government budgets across the region. Borrowing is plugging the gaps for countries with deficits. And decades of trying to buy relevance on the global stage, with financial profits as a secondary goal, often ended with neither.
Today’s Gulf countries still have cash — not to splash around, but to invest in projects that bring tangible benefits back home, where cranes are everywhere and ambitions are high.
It’s unclear where, exactly, a plan by a new UAE sovereign fund to help bankroll Paramount’s $108 billion pursuit of Warner Bros. Discovery fits into this strategy. (An expansion, perhaps, of the Warner Bros. World theme park on Yas Island?) But if the new power balance holds, the self-branded “capital of capital” will get something for its money.
Notable
- Gulf sovereign wealth funds aren’t neutral market actors, but use “state-directed funds to pursue the dual mandate of generating financial returns and projecting state power,” Goldman Sachs’ Jared Cohen and George Lee argue in Foreign Policy — what they term the rise of “instrumental capital.”