How asset servicers are helping Middle East asset managers to internationalise their offerings and returns

The region's strategic location, substantial capital reserves and progressive regulatory frameworks further bolster its attractiveness for both local and international asset managers.

Cross-border fund distribution via key fund centres

To tap into global markets and meet the expectations of both local and international based investors, Middle Eastern asset managers are increasingly leveraging cross-border fund distribution strategies through offshore financial centres such as Luxembourg (the largest fund centre in Europe with €5.2tn of AuM¹) and Ireland (with almost €4tn²).

These jurisdictions are preferred due to their robust regulatory environments, and investor protection mechanisms. They offer widely recognised and globally-accepted fund structures like UCITS (Undertakings for Collective Investment in Transferable Securities) and Alternative Investment Funds (AIFs).

AIFs, in particular, have gained enormous popularity in recent years as they allow investors to access the high-growth potential of less liquid private market assets, including private equity, private debt, real estate, venture capital and infrastructure.

Since establishing itself in the region, Societe Generale Securities Services (SGSS) has been providing comprehensive solutions to Middle Eastern asset managers aiming to embrace cross-border distribution leveraging from its centres of excellences and mainly funds centres such us Luxembourg and Ireland.

These services include fund servicing, custody and trustee services, fund administration, management company (ManCo) services, enhanced regulatory reporting, technological solutions, robust compliance and solutions to support distribution.

SGSS’s role in facilitating fund growth

As part of the multinational Societe Generale banking group, SGSS combines its global capabilities with deep local market knowledge of regional investor preferences, regulatory environments, and distribution channels.

Alessandro Cavallari, head of international sales at SGSS, highlights the evolution of the Gulf Cooperation Council (GCC) region as a burgeoning market for financial services. “The asset management industry in particular has been expanding in the region, with a flurry of multinational asset management firms establishing offices and experts in recent years,” he says.

To cater to the growing demand for international financial expertise in the region, and leveraging Societe Generale’s longstanding presence in the GCC region that includes offices in the UAE, Qatar and Saudi Arabia, SGSS has ensured and fostered its local expertise and established a desk in Dubai to cover the entire region. 

“Although everything could be done on a cross-border basis, we want to have close proximity and build deep relationships with our clients,” Cavallari explains. “We do have to be close to clients to engage with them and we now have a large number of highly trained and skilled people in the region to advise our clients there.”

The growing trend of using offshore centres

Commenting on the trend of international asset managers increasingly use offshore centres such as Luxembourg or Ireland to distribute their funds, Cavallari said: “This trend has been steadily ramping up and has now become extremely significant including in the Middle East," he observes.

SGSS supports the region’s managers in their international growth reach by acting as a depositary bank and fund administrator for their cross-border structures and aiding in international distribution. "Thanks to our group capacity we can also offer management company services in Luxembourg, as an example," Cavallari adds.

Catering for Islamic investment rules

One of the key differentiating points for SGSS in the region is its ability to offer solutions that could address some Islamic investment rules.

Zakaria Aziez, SGSS’s Dubai-based relationship manager for the Middle East, emphasises SGSS’s capacity to offer its full range of services in a Sharia-compliant manner since 2012.

“It's an extra diversification option,” says Aziez. “All in all, we offer a real one-stop shop for our clients. They don't need to look for another bank for product Z, another one for product Y, and another one for X. Every service is fully covered.”

Future growth of the Middle East fund raising industry

The fund management industry in the Middle East is poised for continued significant growth in the coming years. By partnering with SGSS, Middle Eastern based asset managers can confidently expand their global reach and capitalise on emerging growth opportunities. The combination of local market knowledge, international expertise and comprehensive service offerings  through its European centres of excellence,  positions SGSS as a key partner for asset managers aiming to navigate the complexities of international markets.

In conclusion, the Middle East’s asset management industry stands at the threshold of a new era of internationalisation. With the support of asset servicers like SGSS, local managers are well-equipped to meet global and local investors' expectations and seize the opportunities that lie ahead. As the region continues to evolve and integrate more deeply with global financial markets, the role of asset servicers will be pivotal in shaping its success.

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An article published in Funds Global MENA.