Exclusive / Emirates’ Gulf ambitions stir rivalries on Wall Street

An ambitious plan this fall by Apollo Global Management and an arm of Abu Dhabi’s state-owned oil company to invest billions of dollars in artificial intelligence died in the boardroom of Apollo’s biggest Wall Street rival.

For months, Apollo and Abu Dhabi’s XRG had been drawing up plans for a new fund to invest in AI infrastructure, people familiar with the matter said. Each side would initially invest about $2 billion in the fund, which would join other partnerships between Wall Street and Gulf players chasing riches and clout in the AI boom.

XRG’s board met to discuss the project in September at the New York offices of Blackstone, whose president, Jon Gray, is an XRG board member and sometimes hosts rotating board meetings. Gray voiced concerns — ultimately echoed by other directors — that XRG wasn’t an asset manager and that the fund went beyond its mandate as an operator of energy and chemical assets, the people said. Plans for the fund were scrapped.

The episode left some Apollo executives believing a rival had torpedoed the deal out of jealousy. And it left XRG, which was founded a year ago this week, still refining its playbook. XRG, Blackstone, and Apollo declined to comment.

The failed plan offered a glimpse of how intense rivalries in the Gulf and on Wall Street are shaping a moment when investors see huge returns from helping countries in that region turbocharge their economic transitions from oil to tech. While bankers have learned to balance the interests of the UAE, Saudi Arabia, and Qatar — each keen to be a regional hub for high finance — Gulf leaders are learning that their partners also have their own politics.

Abu Dhabi this week is hosting financiers from around the world for its annual investment conference, the centerpiece of its campaign to be the “capital of capital” and a destination for Western investment.

So far, there has been enough appetite and money on both sides to go around without much infighting. Blue Owl has partnerships with Qatar’s sovereign wealth fund to back digital infrastructure, and with Abu Dhabi’s Lunate to buy stakes in other investment managers. BlackRock has tie-ups with both Saudi Arabia’s Public Investment Fund and Abu Dhabi’s MGX. And across the Gulf, new pockets of money and ambitions are popping up all the time: Abu Dhabi’s newest state investor, L’imad — at least its sixth fund — popped up in October and is now among the Gulf funds backing Paramount’s hostile bid for Warner Bros. Discovery.

But the region’s let-a-thousand-flowers-bloom era will likely wane; Saudi Arabia, in particular, has begun to turn its investment portfolio inward, toward domestic projects. Soon, parties on both sides will face increased competition for money and attention, sharpening rivalries between Wall Street firms that are already competing fiercely on other fronts.