DWS Group, the asset management arm of German lender Deutsche Bank, is in talks with some of the biggest sovereign wealth funds in the Middle East to invest in European infrastructure deals and private credit and real estate markets.
The Europe-focused asset manager, which has more than €1.05 trillion ($1.19 trillion) in client assets, is negotiating tailor-made deals with several sovereign funds, as well as some of the largest family offices in the GCC, DWS Group chief executive Stefan Hoops told The National.
The Frankfurt-based firm, which is to formally launch its first office in the Middle East at Abu Dhabi’s financial centre ADGM this week, expects to start announcing investment deals this year, especially on the European private credit front.
“Based on very specific situations, I'm very optimistic for private credit in 2026 and all of those discussions are with Middle Eastern investors,” Mr Hoops said. “When it comes to Abu Dhabi, I think the way the ruling family thinks about pension and long-term security, and also funding, it is quite interesting. Without naming names, you have large pension funds that have become very sophisticated investors over the last couple of years so there's obviously more than one interesting potential partner to cater to.”
Last month, DWS and parent Deutsche Bank signed a €1 billion agreement for a long-term investment collaboration with Doha-based private family office, Al Mirqab Capital, to launch a German Opportunities Mandate. The fund focuses on growth opportunities in the German economy in sectors including energy, transport, defence, education and telecoms, as well as technology and innovation, the company said at the time.
Another trillion-dollar asset manager
DWS, which is acting as the investment manager on Al Mirqab deal, joins a rapidly expanding list of asset managers, insurers, financial institutions and investment houses to set up a base in the region.
Abu Dhabi has garnered a lot of attention over the past few years, with several trillion-dollar investment managers calling the emirate's financial hub their home. The emirate is a base for sovereign investors including the Abu Dhabi Investment Authority, Mubadala Investment Company and Abu Dhabi-investment holding company ADQ, as well as the Abu Dhabi Fund for Development and the Emirates Investment Authority.
Partners Group, a Switzerland-based private market investment company with $150 billion client assets, announced the opening of a regional headquarters at the ADGM in June. In February, German asset manager Patrizia was granted approval by the Financial Services Regulatory Authority to start operations at the ADGM.
New York-based BlackRock, the world's top asset manager with nearly $11.5 trillion in assets under management, in November last year received a commercial licence to operate at the ADGM.
Also last year, the ADGM welcomed its first trillion-dollar asset managers when PGIM, the global asset management business of Prudential Financial was granted a licence. Chicago investment firm Nuveen soon followed, with both companies aiming to expand their operations and client bases in the Middle East.
Mr Hoops said the deal with Al Mirqab would be the first of many. “The thing I've learnt is to try to under-promise and over-deliver,” he said.
There are "many, many discussions” on infrastructure, real estate and private credit, but there are also “much more bespoke situations" and “we have won a couple of mandates”, he added.
Growth aspirations
DWS, which manages $8 billion in client assets in the Middle East, aspires to increase that to the “mid-double-digits in billion terms over the next few years, which sounds to you like a gigantic percentage increase, but it's … coming from a small base", he said.
DWS offers a unique proposition to sovereign funds, large institutional investors and family offices who aim to diversify their investments in different European asset classes, including fixed income and small-cap German equities, he added.
So far, DWS has managed to grab only “a fraction” of Middle East investment flow to Europe. However, Mr Hoops describes the company as a “credible gateway to Europe, closely connected to the governments”, and it should have a “higher share of what's already flowing to Europe”.
ADGM presence
The presence of DWS and the formal launch of its office in the ADGM will help it grow its assets under management, as well as its institutional client base in the region.
The company has about a quarter of its AUMs in the US and the broader Europe each, about 45 per cent in Germany and about 5 per cent in Asia, including the Middle East in market, which can potentially grow to 5 per cent of DWS AUMs.
Institutional investors currently account for half of DWS AUMs and Middle Eastern clients could potentially account for 5 to 10 per cent of the company global institutional client base in the next few years, Mr Hoops said.
Setting up a base in Abu Dhabi was a logical step forward, as it is an “ecosystem of incredibly smart people from all over the world”, Mr Hoops said.
“DWS wants to be that gateway to Europe, but obviously we also need to be very close to those investors that we would like to spend more money in Europe,” he added.
"Currently, the Abu Dhabi office is populated with DWS’ bankers handling coverage … [and] we definitely want to add strategy function, we definitely want to add portfolio managers at some point."
