Wall Street Banks Intensify Hiring in the Gulf to Keep Up with "War Deals"

SadaNews - With the outbreak of war in the Middle East in February, Wall Street banks were preparing for the possibility of a prolonged slowdown in the region's activity. However, after three months, many financial institutions are turning to hire more bankers, as local investors have largely ignored the implications of the conflict and continued to ramp up deal-making activity.

The value of deals involving Gulf entities soared by about 200% in the first half of the year to reach approximately $300 billion, according to data compiled by "Bloomberg". This surge was backed by massive investments in companies leading the artificial intelligence boom, such as "OpenAI" and "Anthropic", which helped deal-making activity rebound strongly after a decline of about 15% year-on-year in March with the onset of the war.

Furthermore, the Iran war prompted regional governments to accelerate plans to increase spending on infrastructure and defense, which could open the door for new multi-billion-dollar investments and lucrative business opportunities for Wall Street banks.

Despite the war.. banks' revenues from their operations in the Middle East increase

According to "Dealogic" data, investment banks' revenues from their operations in the Middle East increased by about 5% in the first half of the year to $619 million, driven by a 55% jump in M&A fees, which offset a decline in equity issuance revenues.

The resurgence in deal activity during the war has changed the outlook for several investment banks operating in the region. A knowledgeable source stated that one prominent investment bank, which previously anticipated not meeting its annual targets, is now on track to achieve them and plans to increase its headcount.

Another source added that a second investment bank was also surprised by the volume of deals and is currently working on investment transactions outside the region, in addition to infrastructure and defense projects within the Middle East.

The hiring wave in the Gulf continues

This increased activity has led to a hiring wave that has persisted since the beginning of the year. For instance, "Barclays" moved energy banker George Tanner from London to Dubai as part of its plans to expand its regional presence, while "JP Morgan", "Standard Chartered", "Deutsche Bank", and "Rothschild & Co" are working on boosting their teams in the region, according to informed sources.

Additionally, other institutions such as "CitiGroup" and "Lazard" continue to announce job openings in Dubai, according to postings on the "LinkedIn" platform. In this context, one Chinese bank is looking to hire bankers in Dubai as part of its plans to enhance dual listings between the Hong Kong Stock Exchange and the UAE capital markets, according to an informed source.

The expansion is not limited to banks, as international law firms have also strengthened their presence in the region, including "Skadden, Arps, Slate, Meagher & Flom", which is based in New York; it opened an office in Abu Dhabi last year and increased its staff.

Representatives from "CitiGroup", "Lazard", "Rothschild", and "Barclays" declined to comment on hiring plans.

Rajesh Singhi, the global head of M&A advisory at "Standard Chartered", stated that the bank continues to selectively attract leadership talent, "believing that the Middle East will play an increasingly important role in global capital flows and deal activity".

In turn, a spokesperson for "JP Morgan" clarified that the pace of hiring at the bank reflects the needs of its business and clients, while Majed Gulfarr, the head of corporate coverage for the Middle East and Africa and the executive officer at "Deutsche Bank" in the UAE, noted that the region possesses "strong economic fundamentals and long-term growth prospects".

Attracting talent remains a challenge

There are certainly significant regional challenges that remain, including attracting talent. Despite the return of many bankers, traders, and senior executives who temporarily relocated after the Iranian missile targeting of the region, uncertainty continues to loom. Negotiations between the U.S. and Iran have stalled due to contentious issues, and have repeatedly been disrupted due to reciprocal attacks between the two sides.

Gregory Agius, CEO of "Agius & Partners", a finance and private banking recruitment firm based in Switzerland, stated: "We have certainly seen a shift in the atmosphere". He added that lower taxes, growth, lifestyle, and the concentration of capital across the region remain strong attraction factors, but candidates have become more selective.

Agius explained: "The decision now revolves around personal safety, and this changes everything". He added: "Employers need to be more competitive regarding compensation, relocation support, and long-term vision".

Impact of the war on deals and IPOs

The war has affected some areas of deal-making, including initial public offerings (IPOs). Several IPOs in the region have been postponed or canceled after the outbreak of the war, amid shareholder concerns that geopolitical volatility might impact stock trading performance.

The war has also harmed deal-making activity in sectors such as construction, retail, and hospitality, according to George Traub, managing partner at "Lumina Capital Advisors". However, he noted that mergers and acquisitions in strategic sectors continue, "and in fact, some are gaining even more momentum" in vital areas such as food security, energy, infrastructure services, logistics, and defense, which are sectors that require larger-sized deals, cross-border financing, and more complex financial structures.

After weeks of the war outbreak, which began when Israel and the U.S. attacked Iran, leading to a response from Tehran, some senior Wall Street executives acknowledged that there are "headwinds in the near term" facing the region. Nevertheless, many were quick to express support, betting that Gulf governments will use their oil wealth to play a larger role on the global stage. David Solomon, CEO of "Goldman Sachs", told "Bloomberg News" at the time: "Our clients' ambitions across the region have not changed".

Gulf Sovereign Wealth Funds Continue to Invest

Indeed, Middle Eastern investors continued to pump billions of dollars into various sectors. Gulf sovereign wealth funds have committed to record investments of $53.9 billion since the beginning of the year, half of which went to the U.S., followed by China, then the UK, while the technology sector attracted the most investments, according to Diego Lopez, managing director of "Global SWF".

Lopez stated: "Mubadala again topped the list of the most active funds after investing $15.2 billion across the group". He added, "The seven other Gulf funds did not show any signs of slowing down despite the Iranian war".

Together, Gulf sovereign wealth funds manage assets approaching $5 trillion and have long been among the prominent backers of global deals. Over the years, during times of financial turmoil, these funds have often intervened as a lender of last resort. This time, with the conflict occurring near their borders, regional governments have also unveiled a wide array of plans to enhance their capabilities in key areas.

Strategic Projects in Saudi Arabia, the UAE, and Kuwait

For instance, the UAE is working on a plan to end its dependence on the Strait of Hormuz. The crux of the plan is to expand its eastern ports located outside this vital maritime corridor along the coast of the Gulf of Oman. Meanwhile, "Liamad" in Abu Dhabi is joining local and international partners in an investment project targeting $30 billion in infrastructure projects.

In Saudi Arabia, "Aramco" officials have outlined the most ambitious privatization plans in the company's history, driven by a desire to strengthen the balance sheet, and it is expected that these deals will ultimately raise up to $35 billion, according to "Bloomberg News".

In Kuwait, a group of the largest global investors, including "BlackRock" through its "Global Infrastructure Partners" arm and "Brookfield Asset Management", are competing to win a $7.5 billion stake in the government oil company's pipeline network.

Two months after the outbreak of the war, Navid Mahmoud Zadehgan, CEO of "Molis & Co", was already talking about the "return to normalcy" in the Middle East, where the firm is closely tied to the region's governments and is considered a significant player in deal-making. He stated: "There is a real opportunity, once we get through this phase, to reach a new Middle East".