Nomura AM opens Dubai office

13 June 2014   Category: News, Asia, Global, Japan, Middle East   By Daniel Shane

Nomura Asset Management (Nomura AM) has opened an office in Dubai as part of the Japanese fund manager’s push to tap into the vast surpluses of oil revenues held by the Middle East’s sovereign wealth funds (SWFs) and other institutional investors.

Nomura AM’s office is located in the United Arab Emirates’ onshore banking and finance hub, the Dubai International Financial Centre (DIFC), and the firm has appointed Tarek Fadlallah, a veteran of Nomura in the Middle East, as chief executive officer.

The firm said it would use its Dubai platform to promote and market its international funds to SWFs, pensions and other institutions, in addition to providing a more hands-on relationship for its clients in the Middle East.

"Our decision to open a Nomura AM office in the region reflects our ongoing commitment to the Middle East. We are looking to reinforce our activities and offer investors improved access to our world-class products. The development of the Nomura AM Middle East business is a key step towards achieving this goal," said Mr. Fadlallah, in a statement.

Nomura AM currently manages equities across the six-nation Gulf Co-operation Council (GCC) via the Japanese yen-denominated Nomura Arabian Fund, which was first distributed to Japanese investors in 2007. It also manages Middle East stocks through its frontier and emerging markets funds.

The Middle East is home to some of the world’s richest institutional investors, including the Abu Dhabi Investment Authority (ADIA) with assets of approximately US$773 billion in AUM, and the Saudi Arabia Monetary Agency’s foreign holdings arm, which has around $737.6 billion in assets.

These institutions’ cash reserves are largely fuelled by surplus revenues channelled from the region’s vast oil wealth, but they are increasingly seeking higher yields from their foreign investments. The International Monetary Fund has warned Saudi Arabia that it could face a budget deficit by 2016 based on a projected downward trend in oil prices, while it also told Kuwait that it would have exhausted its oil savings by 2017 if its government keeps burning through cash at its current rate. These factors have increased the urgency with which governments in the Gulf must generate alternative streams of revenue.