Middle East sovereign funds make record deals in China

Middle East sovereign wealth funds have made record investments in China this year, data shows, even as other global companies have pulled back.

The Abu Dhabi Investment Authority, which is part of the $8.3 billion deal to buy the shopping mall management unit of Dalian Wanda Group, was part of another Abu Dhabi fund, Mubadala Investment Co.

Lenovo Group Ltd. announced in May the sale of $2 billion in zero-coupon convertible bonds to Saudi Arabia’s sovereign wealth fund as part of a broader strategic agreement with the kingdom.

Data compiled by Bloomberg show that deal volumes from Middle Eastern companies into Greater China have already reached a record $9 billion this year, with three months to go. Dealmakers expect the pace to accelerate in the coming quarters.

“The valuation of Chinese assets is the most attractive in the entire Asia-Pacific region,” said Mayuran Elalingam, head of investment banking and advisory coverage for Asia-Pacific at Deutsche Bank AG. “Investors in the Middle East are investing in a short-term timeframe and are looking for markets to normalize over time.”

Middle Eastern wealth funds, which collectively control more than $4 trillion in assets, have become major players in the dealmaking industry, accounting for more than half of all deals by state-backed investors around the world this year.

According to data from consultancy Global SWF, firms including the Abu Dhabi Investment Authority, Saudi Arabia’s Public Investment Fund and the Qatar Investment Authority backed deals worth $55 billion in the first nine months of 2024.