Lazard has poached ING’s Middle East equity team based in Dubai.
The US bank’s asset management business has hired the former ING managers as it plans to restaff Lazard’s Dubai office after it was temporarily shuttered last year.
ING’s Dubai-based chief executive Farah Foustok and head of asset management Fadi Al Said are among those leaving.
The newly recruited investment team “will manage Mena and frontier markets’ equity strategies for local and global clients, leveraging Lazard asset management’s extensive emerging markets expertise and global research resources,” Lazard said in a statement.
ING’s Dubai office will remain as a sales office.
ING said the closure was “in line with the overall strategy of ING Investment Management to only continue full-fledged local for local asset management operations business in countries where ING also has a strong insurance presence”.
Rebounding equity markets and accelerating investment banking activity in the UAE is stoking demand for many investment professionals.
Lazard does not have a Middle East asset management business. The bank’s asset management division has a representative office in Bahrain, which opened in 2008.
Its Dubai office previously housed its Middle East advisory team that was focused on large sovereign wealth fund transactions. When Ali Asghar, the US investment bank’s top banker in Dubai, left last July to set up his own emerging markets-focused boutique company, Lazard’s operations in Dubai effectively ended as staff were redirected to the lender’s London office amid a dry-up of deals following the global financial crisis.
Calls to Lazard’s Dubai office yesterday were redirected to London.
“We have temporarily closed our offices as there is no current activity in Dubai,” said Mohammed Tahir, an employee at the Lazard office in Saudi Arabia. “We kept our office, but no staff is available there. There’s a lot of competition and business was not as per our expectations.””
A surge in prices and liquidity on the local bourses in Abu Dhabi and Dubai, boosted by a revival in investor appetite and the inclusion of the UAE into MSCI’s emerging markets index, may have encouraged Lazard to build up an equity presence in the region, fund managers said.
Dubai ended the year ranked as the second best performing index after Venezuela, with a 107.6 per cent return for its investors. Abu Dhabi’s gain was 63 per cent in 2013.
“It’s not a straightforward rosy picture,” said Sebastien Henin, a portfolio manager at The National Investor in Abu Dhabi. “ING was one of the largest players in the industry and they decided to shut down. At the same time you have Lazard, which is a big player in asset management in the emerging markets space and they want to move fast and grab an entire team to save time. This headhunt was opportunistic for them.”
Following the establishment of Dubai’s financial free zone, western lenders flocked to the emirate to capitalise on a flurry of deals from taking companies public to advising on sovereign fund mandates. But the global financial crisis cut access to credit in the emirate, triggering a major sell-off across Dubai’s banking and property sectors.
From 2005 to 2011, the emirate’s index lost more than 80 per cent of its value. Traded value on the UAE markets also dropped to a trough of Dh57 bilion from Dh537bn in 2005.
Investment banks, whose key businesses include advisory, equity research and brokerage services, were forced to rethink their business presence, leading to retrenchments and the closure of their loss-making divisions.
A former senior banker at Lazard said the question remains whether big transactions on the advisory side, such as work on the billion- dollar Xstrata and Glencore merger, are better served out of London than from Dubai.
“But on asset management it makes sense. That’s where the growth had been and done well. This region is a source of capital where money can be taken from the region and put into equity globally,” the banker said.