Mubadala-backed Fortress Investment Group keen on Middle East deals

Region's IPO boom is poised to continue as energy prices remain high, senior executive says

There has been a flurry of listings in Dubai, Abu Dhabi and Riyadh in the past two years. Antonie Robertson / The National

Fortress Investment Group, backed by the UAE’s Mubadala Investment Company, is “actively” looking to expand across the Middle East, with potential investments in sectors such as energy, real estate and finance, a senior executive said on Thursday.

“Historically, we didn't focus much on making investments here [the Middle East], but I think things are changing. We are looking at several things that could be of interest, the market is now mature to attract foreign capital,” said Francesco Colasanti, co-head of Europe at Fortress Investment Group.

The New York-based investment firm, which manages assets worth $49 billion, is now “actively looking at the easiest sectors to enter, [in the region including] energy, real estate and financials”, Mr Colasanti told The National on the sidelines of the Milken Institute Middle East and Africa Summit in Abu Dhabi.

The Middle East's initial public offering boom is likely to continue as energy prices remain high, especially with markets such as Europe capable of absorbing significant price shocks, he said.

There has been a flurry of listings in Dubai, Abu Dhabi and Riyadh in the past two years on the back of a push from governments to boost liquidity as well as growing investor demand.

Brent crude, the benchmark for two thirds of the world’s oil, surged to nearly $140 a barrel following Russia’s invasion of Ukraine in 2022. The jump in oil prices significantly boosted the economies of Middle Eastern crude-producing nations, with Saudi Arabia and the UAE recording some of the fastest gross domestic product (GDP) growth rates that year.

In 2023, Mubadala, Abu Dhabi’s strategic investment arm, announced the acquisition of a majority stake in Fortress. The deal closed in May this year.

Earlier this year, Fortress invested $100 million in British semiconductor company Imagination Technologies Group, expanding its footprint in the sector being fuelled by artificial intelligence.

Europe lags

However, Mr Colasanti has a bleak outlook on Europe’s economic prospects, pointing to slowing growth, political instability, rigid labour markets, and the risk of "higher-for-longer" inflation, driven by US president-elect Donald Trump’s proposed tariff policies.

“I'm not very positive about Europe, because when I look at the fundamentals, GDP is not growing,” Mr Colasanti said.

"Germany, the locomotive of Europe, is slowing down. Normally, when Germany slows down, everyone slows down. France [is going through] a very heavy political [and] economic issue," he added.

Germany and France, the economic powerhouses of the EU, have faced numerous challenges in the past year, including domestic political disputes, high levels of debt, and sluggish investment.

On Wednesday, the Organisation for Economic Co-operation and Development (OECD) lowered its economic growth projections for both countries.

Germany's expected growth for next year has been reduced to 0.7 per cent from 1.1 per cent, while France's projected growth has been cut to 0.9 per cent from 1.2 per cent.

Germany, France, and Italy have the “most rigid labour markets in the world", making it difficult for companies to right-size their businesses, Mr Colasanti said.

He also warned that a trade war could prolong inflation, forcing the European Central Bank to maintain higher interest rates for an extended period.

“All of these tensions will create moments of dislocation, and that's what investors like us are focused on in specific moments in time,” Mr Colasanti said.

Europe will eventually bounce back, but it will require structural changes, including reforming labour laws to retain or attract talent in the technology sector, the formation of Eurobonds, and common defence procurement, he added.