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KKR has named General David Petraeus as chair of its expanding Middle East business as money managers pile into the oil-rich Gulf region to bet on its growing economies and be closer to its sovereign wealth funds.
The US private equity firm announced the former CIA director’s appointment on Monday alongside the launch of a “dedicated investment team” for the region.
The move comes as sovereign wealth funds in the Middle East and north Africa worth an estimated $5.4tn seek to channel investment towards their domestic economies, and expect the asset managers with which they partner to show commitment to the region.
“The Middle East is emerging as a leading investment powerhouse,” said Petraeus, who was already a partner at KKR, in a statement. He added that KKR saw opportunities to invest in or lend to “domestic businesses” in the region.
Counter-insurgency specialist Petraeus served in the US military for 37 years and oversaw US and allied forces in the so-called “surge” of 30,000 American troops into Iraq in 2007, which sought to bring some stability to the country after the 2003 US-led invasion unleashed a devastating sectarian civil war.
He went on to lead US Central Command and US forces in Afghanistan before being appointed CIA director by President Barack Obama in 2011. But he resigned a year later, saying he had shown “extremely poor judgment” by having an affair. Petraeus was later sentenced to two years probation and fined for sharing classified information with his lover and biographer.
The Middle East includes nations such as Syria, Lebanon and Iraq, whose economies have long suffered from conflict and corruption. But money managers are focused on the wealthy autocracies of the Gulf Co-operation Council, especially the region’s largest economies Saudi Arabia and the United Arab Emirates.
KKR already has offices in business hub Dubai and Saudi capital Riyadh, where staff manage the firm’s partnerships with its investors. But it will now build out a dedicated team for investing in the region, based in Dubai and initially consisting of managing director Julian Barratt-Due and another colleague, a spokesperson said.
“We view the Middle East as an increasingly important destination for investment,” said KKR’s co-CEOs Joe Bae and Scott Nuttall. The firm sees particular opportunities in infrastructure, private credit and lending secured against assets, according to a recent note by the firm’s head of global macro, Henry McVey.
KKR is joining a herd of asset managers beefing up their presence in the region. Last year BlackRock struck a deal with Saudi Arabia to launch an investment firm in Riyadh, while traditional investors and hedge funds have hurried to establish offices in Abu Dhabi or Dubai.
The New York-listed investment group’s most recent bet in the Gulf was on the region’s data centres market, acquiring a stake in UAE-based Gulf Data Hub. Details of the investment were not disclosed.
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