In a significant move indicative of the growing global interest in the Middle East, U.S.-based Golub Capital, a prominent direct lender and private credit manager, has announced the opening of a new office in Abu Dhabi, the capital of the United Arab Emirates. This expansion aligns with the broader trend of financial firms establishing a presence in the region as they seek to tap into the vast opportunities presented by the wealth of local sovereign funds. The announcement marks a crucial step for Golub Capital, which, as of October 1, manages over $70 billion in capital, emphasizing its robust standing in the private credit industry.
License Approval and Local Leadership
Golub Capital has secured preliminary approval to operate within the Abu Dhabi Global Market (ADGM), a financial hub designed to bolster the emirate’s status as a global business center. This move not only enhances Golub’s operational capacity but also signals its commitment to cultivating relationships within the local financial landscape. Naser Almutairi has been appointed as managing director for the Middle East, a strategic choice that highlights Golub’s intention to engage deeply with regional dynamics, further facilitating connections with local wealth funds and institutional investors.
Abu Dhabi’s Economic Diversification Efforts
As a region rich in resources, particularly oil—holding 90% of the UAE’s reserves—Abu Dhabi is actively pursuing economic diversification strategies to lessen its dependency on hydrocarbon revenues. The establishment of the ADGM is a crucial part of this strategy, aimed at attracting international financial services firms and transforming the emirate into a global financial hub. While it may not yet rival the robustness of Dubai’s Dubai International Financial Centre (DIFC), ADGM has made significant strides, with assets under management swelling to $157.2 billion by mid-2023, as various firms, including BlackRock and hedge funds like Brevan Howard, take advantage of the opportunities available in this emerging financial landscape.
The private credit market is witnessing an unprecedented expansion, an evolution driven by stricter regulations that complicate traditional lending processes. As a result, alternative financing options are becoming increasingly attractive to businesses seeking flexible capital solutions. Market analysts project that the sector could grow from $1.5 trillion at the end of 2022 to an impressive $2.6 trillion by 2029, highlighting a trend that Golub Capital is well-positioned to leverage. Notably, BlackRock’s recent commitment to acquire HPS Investment Partners for approximately $12 billion further underscores the burgeoning interest in this asset class.
Moreover, Gulf sovereign wealth funds, including the influential Mubadala Investment Company, are actively expanding their portfolios in the private credit space. Mubadala has formed strategic alliances with prestigious firms like Apollo and Goldman Sachs and recently announced a significant investment by acquiring a 42% stake in the American credit asset manager Silver Rock Financial. These partnerships are indicative of the confidence local funds have in the private credit market and point to a future rich with collaboration and innovation in financing solutions within the UAE and beyond.
Golub Capital’s entry into Abu Dhabi reflects a pivotal moment for both the firm and the region as a whole. As the UAE continues on its path of economic transformation and diversification, established and emerging financial players alike will undoubtedly find fertile ground to advance their interests in this dynamic market.