High oil prices offer Middle East SWFs more capital to invest in alternatives

Higher oil prices are providing fresh capital to the Middle East's sovereign wealth funds to increase allocations to alternatives, a new study showed.

Given that much of the regional SWFs' funding relies on state-owned oil and gas industry revenue, the crude price rally is driving new opportunities for managers to help them diversify from a reliance on commodities, research company Preqin said in the report.

The eight-largest Middle Eastern SWFs collectively have more than $3 trillion in combined total assets, according to Preqin data, which is aimed at helping international managers source new capital from investors in the region.

"With oil prices at highs not seen since before 2014, the region’s economic outlook is improving, but the desire to move away from reliance on oil revenues provide opportunity for private capital models to see capital invested outside the region," said Alex Murray, vice president of research insights at Preqin.

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