Alts Prime Time Why the Macroeconomy is Powering a New Playbook

[music] Thank you so much for the introduction. Um hello everyone. First of all, a really really warm welcome to this session. Glad to be back at Abu Dhabi finance week after a gap of two years and I must say a lot has changed since then. The vibe is really nice, energy is there and the scale is larger than ever before.

So thank you so much for arranging this event. Um today's topic I mean 2025 has been an interesting year for both public markets as well as private markets. Public markets traveldriven volatility but we have seen stock markets we saw and then we saw them hitting all-time highs later in in the year as well and same with the private markets as well. We saw a lot of activities as we proceeded in the last few months. Uh so without further ado we are happy to have a bunch of experts who can shed some light on why this is the prime time for all especially in this macroeconomic environment.

So without further ado I would like to proceed with introductions first. Diana.

Hi everyone. So my name is Diana. I'm the chief strategic partnerships officer at Iconnections which is a capital introductions technology platform representing around 50 trillion of GP and LP assets. Good afternoon everyone. My name is Chris Busby.

I'm the managing partner of Bridgepoint Europe. We're a private equity firm investing in the midmarket typically in European headquartered assets. We have three parts to our business. We have an infrastructure, a credit, and a private equity business. And we have about 85 billion of assets under management.

Good afternoon everyone. My name is Alan Foy. I'm a founder and chairman of Venture Wave. Uh we are a venture private equity group that specialize in impact investing and impact strategies uh in series A, B and and beyond uh in technology companies that are transforming some of the world's biggest challenges using AI and other tools in some amazing sectors like health, education, climate and so on. So we're really excited to have the conversation today.

Hi, I'm Karim Sullah, co-founder CEO of Gulf Capital. We're one of the oldest largest private equity firms based in the Gulf actually based here in ADGM and we invest across the Gulf and Asia regions with offices across the GCC and Singapore. And Dr. Karim, we'll start with you as as Gulf Capital is actually a very well-known name in this in this region specifically Middle East you talk about or Asia. How has 2025 changed the investor sentiment?

When we talk about the alternative investment management landscape in general and more specifically the private equity market, I think the what we're seeing is a big interest in the Gulf region. When we sw we started here 20 years ago, it was a very lonely place to be with very little investor appetite. You can see it in this conference. So many global investors are coming here. They're interested to deploy invest in the region.

At the end of the day, this is one of the fastest growing regions in the world. It's very ref refreshing to see global GPS coming here and global investors looking to invest in the region. In the past, GPS were sucking capital out of the region. Now, they're looking to deploy in the region because it's an exciting region to invest in. And Alan, when we talk about the private equity model in general, it is extremely important to understand what founders are building these days.

Are there any specific areas they're particularly excited about? In your opinion, which are those sectors or areas that they're really excited about when building their products?

That's absolutely right. I think and first of all, I should mention that we've actually opened up here in Abu Dhabi as well. And I think you know bringing capital to the region is vital and actually the amazing entrepreneurs that are actually flocking to this country and to this region is just uh really really really really positive. I think as a trend um we back entrepreneurs that are transforming business models. You they're transforming sectors.

So if I take the likes of you know healthcare value chain or a climate value chain or energy transition value chain you know technology and AI is really changing the game and the operationalization of those technologies and these entrepreneurs have huge visions uh and not just to their local region to their local territory but on a global scale uh if you look at the venture dollars I mean about half of venture dollars over the last year have actually gone into an AI strategy uh so there will be big winners in the space there'll obviously those who don't don't pass the finish line. Uh but what I will say is that you know risk is on the pencil slightly sharpened uh but the bigger the vision the bigger the model the bigger the transformation story the bigger role that AI has to play and we're very bullish

and Chris um talking about AI or any particular sector or particular niche even if you talk about AI it it it's a broader topic it's a massive sector so it is extremely important to pick up a niche within a particular sector in your opinion how important is it to pick up a pick up a particular niche Yeah. Um, well, look, I think all of us would agree it's it's absolutely critical to sort of pick your space, find your areas of growth. Where is the market opportunity richest and deepest? And I think that actually for us that's far more important than the macro because we're a European private equity firm, fundamentally European headquartered, but we have portfolio operations in 40 countries. So, our exposure is global.

So, being in the right niche is critical. I think the the thing that's also really interesting for us is if you take the European market, it's not one market. So when you're looking for a niche, what may be really attractive in Germany may not have the same evidence in France or maybe you can't take it to the US in the same way. Um, so some of the complexities of Europe are actually some of the biggest advantages about mining these niches. So we have a strategy.

We have eight niches. These are all areas that we've invested in sort of perennially over many years. But it's not just about picking your niches. It's about executing because I can sit there and say medtech or AI or power towards AI or healthcare innovation. These are really obvious areas.

Executing against that is more difficult and you need people on the ground. You need a network and you need to access them. And I think for us that's probably a bigger challenge um that you see in the market. Now we have roughly 120 people across Europe trying to do that which is how we get our deal flow but I think you have to start with your niche that that is the driver of your growth it's the driver of your returns

and Diana when we talk about I connection is is one of the biggest names in the cap intro business we all know that so who better than you to tell us how has the discussions between the allocators and fund managers changed in the last few years

I think so the conversations are definitely shifted and the tone of the conversations. LPS used to um ask for the big story. Now they want the hard evidence. How are GPS managing liquidity when exits are um slow? How valuations being managed with higher financing costs and what do what does the real exit plan look like?

So it's much more about concrete uh evidence uh that that LPS look for

and what do allocators actually demand from fund managers from that? really transparency and operational excellence. So that is a key that keeps coming up building teams with um you know excellent talent and transparency into portfolio companies where they want to see the ability to grow the companies and not just buy them at a good price. So I would say the key areas of that sort of transparency and operational excellence from GPS and given that um the top 10 private equity managers now um attract well attracted 40% of uh the capital there will be concentration of this capital um with bigger managers and LPS have becoming far more selective in in their partnerships with GPS

and in one general questions to all of you and I I'll start with you Dr. Karim um alternative investment management space is is a competitive space. It's not easy for to generate returns or beat other people within the sector. Are there any specific sectors which you think are likely to generate more returns as compared to other sectors going forward?

We used to be a big oil and gas investor and our second fund we decided to shift and go towards the sectors of the future. So we're big investors in tech, fintech, healthcare, business services, consumer sustainability and all of all of these sectors are growing double digit. And actually we see it in the data in our portfolio companies on average our portfolio companies are growing at 25% per year in profitability. The growth is twofold. The macro the region is growing phenomenally.

Abu Dhabi just grows 6.8% in the non-all sector. Phenomenal macro growth. But the portfolio companies and the sectors we're investing in are growing very fast as well. Obviously, we're a very hands-on investor.

We have a big bench of operating partners, industry experts. We make a big difference to our portfolio companies and we on average we triple the profitability of our companies. So the sectors we invested in are all growing remarkably in the region. Alan.

Yeah, I think well first of all from as a as a growth investor you know we we are actually many of our teams much like some of the folks here are kind of operators turned investors. So actually built and scale technology companies and multi- territory uh understand the nuances of doing that and then bring a bit of those lessons learned if you like to the portfolio uh and really as a as a supporter and a cheerleader of the entrepreneur but also helping them navigate some of those big decisions. Um we tend to differentiate in a few ways and one thing I would like to touch on is obviously as an impact strategist. You know we kind of use our own methodology around how you assess an impact of a company both commercially and also using an impact scoring methodology which we developed uh and that and we actually use AI in the investment process to make sure we're looking at the best deal flow. So we're actually using our own technology to actually help the decision- making.

So that helps us differentiate. Um I think there isn't a sector in the world that isn't being touched by AI at the moment. Uh and the key thing is trying to understand the business model transformation on the application layer and understand how large and scalable that can be in multi-territory and to do that you need a lot of data you need a lot of smarts but then you need a lot of luck as well Chris

yeah I I think I agree I mean I think if we really started our sector specialism as a fund probably about 20 years ago and I think we no longer think about business services or healthcare we go down to the niches within so we look at medtech we look at fintech we'll look at a science these are the sort of this these are the streams of growth that we really see and where we've built our expertise I think one of the things you were you asking about competition I think the complexity of Europe that I've also referred to earlier you can see in the competitive landscape so if you take the midmarket which is where we operate the market in in Europe is roughly the same size as the US but there's half as many GPS in Europe as there are in the US and I don't think that's just because the industry's grown at different rates it's more complex it's more difficult to navigate. So I think you've absolutely got to look at these streams. AI is going to be a huge positive force, a disruptor. It's going to re-engineer industries. You're seeing a wave of deals in some areas of professional services where people are taking a bet on how technology can reinvent the service.

There's going to be some big winners and big losers, I think, as a result of that. Dana,

in terms of the themes we're seeing, it's really technology, financial services, and um consumer categories. um continue they continue to stand out due to the strong underlying demand the clear digitization tailwinds and multiple avenues for revenue generation

and going forward tell us how the risk appetite of investors have has changed in the last few years. Obviously what's what's going on in global market sometime they get get a little scared of volatility uncertain micro economic environment but how has the risk appetites changed in this particular year and what do you see going forward Dr. Kareem if you want to start

I think uh investors are looking to diversify away from the US and move closer to this region I don't think it's riskier to come here it's a big diversifier actually if you look at a time when uh US and European economies are slowing down our economies are booming dramatically and when European US exits alltime low ours are the exits are alltime high so allocating to this region doesn't add risk it adds diversification we have like almost a negative correlation so I tell our global investors you really ought to allocate to this region because it's a great diversifier well I think fundamentally like if you look at the national vision here in the UAE and the region you know the ecosystem is being built here you know if you if you take some of the big strategic investments that are happening in infrastructure in power uh in energy transition in health it they're happening here uh and as an investor you know, you you're getting advantage of that. You're you're enabling it. It's being enabled. You're you're you're there's a synergistic benefit if you like to that. So, I think from fundamentally, I think this region has huge growth potential over the next 10, 20, 30 years.

And as an investor, if you're not here, you're missing out. Um, just to your to your point around risk and the and the kind of changing mindset, you know, there was a time in venture that was kind of growth at all cost, you know, and we've all gone through that and seen it in the the the bullish periods. I think right now investors are looking for growth, but they're looking for that strong unity economics path to profitability, looking for sound business models that have transferability and scalability. Uh, and perhaps doubling down on that a little bit more than they would normally, but that's a good thing for everyone, LPs and investors included.

Chris,

I mean, if your question is how do I think other people's risk appetite is going to change? That's always a sort of tough one to predict and and anyone's guess. I think what I would say is I totally agree there's there's huge growth across different regions that the reality is they don't it's not linear um for us therefore there's a big benefit in having exposure to you know a diversified exposure to those growth areas but it's also about capturing the strategic value in the businesses you're building because yes it's about the EBIT DAR it's about your growth it's about your margin but you need to monetize that you need to find a way of capitalizing and we've seen a lot of success or a lot of evidence of international buyers wanting exposure to certain markets. So we have a number of portfolio businesses where this is their fastest growing region, but we're attaching an international bias set that were completely different to the ones we competed with. And I think that's a trend that you're absolutely going to see and is going to sustain.

The other point I would make is it's because it's difficult to predict exactly how these markets are going to develop globally. It's not just about the pricing of your investments, it's the pacing of your investments. And if we if we sort of think back to 2021 when actually all the markets were on fire, asset inflation was sort of was very evident. Actually, I think if you deployed a huge amount of capital at that point in the market, it's going to have been expensive. So it's not just the pricing discipline you need, it's the pacing discipline as well.

Dana,

um so um we do see commitment to private equity still there and obviously um LPs know that the US mega mega caps can't carry returns forever. So they are looking to diversify but I mentioned earlier this concentration on fewer relationship but with quality GPS so there's definitely appetite

and and Chris starting with you what do you think is the future of the private equity model going forward?

Um well I think there's there's three areas that I think are sort of they're inevitable. I think there's going to be more consolidation in the industry. It's an industry that's grown so rapidly. I think there is 12,300 mid-market private equity firms in the US. I'm sure they're all completely differentiated and and you know five six00 in Europe.

It's going to consolidate. I think there's going to be increasing specialization. You know, we are very very focused on which of the core sectors where we have a track record, we have a right to win, we have a playbook, and I think really sticking to that specialism is how you generate consistently strong returns. And then finally, I think it's going to differentiate and and the differentiation is those delivering consistently attractive strong returns and act as a partner with their LPs because there are moments in time when you get quite varied results in terms of people's performance, but actually if you look over 10 years, there's some pretty clear trend lines developing. So I think it'll be more consolidated.

I think it'll be more specialized and the differentiation will be through those generating consistent returns. Alan, you I concur that I think specialist strategies are going to win out. Uh absolutely. I would also say that global networks are going to play a really really important role. So if that's deal sharing, syndication, co-investing with others in my world, that's more and more important because ultimately, you know, local knowledge with global reach is really really powerful.

Um I'm probably going to think I'm I'm I'm single-minded on this, but I do think that AI is transforming the investment process. I mean, we're using it today. We're investing millions in how uh AI can enable us make better decisions on a daily basis. Now, you still need a human at the end of the day as the asset manager. That's what we're there for.

But using the tools that are there to enable your decision- making, make better better returns for your investors and ultimately manage risk at the same time. That's got to be the future and that's what certainly what we're investing in.

Kenny,

we're seeing two trends. The first one, I think David Rubenstein this morning mentioned it. the global south is going to catch up on private equity. Uh global investors are extremely underallocated to the global south. Uh they're overallocated to the US and Europe and it's going to come here and we're seeing it.

So you're going to see a reallocation towards this part of the world because at the end of the day over the next 30 years the growth is coming from Middle East and Asia essentially. So that's one trend. The other trend we're seeing is it's amazing how AI is boosting the productivity of our portfolio companies. We're going to be using it in every single portfolio company. I'll give you an example.

We own uh company called CWB. It's the world leader in registering trademarks and patents. We operate in 100 countries out of ADGM. And it used to take us 15 hours to take a patent, study it, and file it and then build a client and translate it. Today we have five agentic AI robots working for us.

We do it in 10 minutes. Our aida margin shut up from 20 to 90%. So you look at this and say how can I not use technology in all my portfolio companies. It's coming and actually we have to adopt it. It's like eat or be eaten.

If we don't adopt technology our portfolio companies have no hope. So we want to be leaders in that and that's coming.

So just last question as we are running out of time. You talked about Abu Dhabi, you talked about UAE in general. What makes Abu Dhabi special in this space? What are the advantages Abu Dhabi has?

Look, we have portfolio companies operating in 100 countries around the world. You won't find a place where there's leadership, vision, execution, diversification. When I moved here 25 years ago, this economy was 75% oil based in the UE, 25% non- oil. Today, it flipped is 75% non oil, 25% oil. We have amazing leadership that's executing and diversifying and today we're world leaders in adoption of AI and renewables along with the US and uh China.

So it's a great place to be in today.

Alan, I think I I fully agree. I think ultimately, you know, you've got that leadership, you've got capital with capital, you've got global trade links, and you've got talent, lots of talent coming here, wanting to live here, uh and talent that that's emerging from here. So I think all those three elements converging make it a very very positive place to be. Chris.

Yeah, to try and be brief, I totally agree. I mean, we've had assets here, material exposure for 15, 20 years, but we've opened an office in Abu Dhabi. Um, you know, we think this is a really core core area and market for us. And actually, just just look at the energy that's in this conference. It's sort of evidence.

There's the long-term thinking of the region, but there's also just the energy and the sort of the can do attitude that I think is really palpable. Dino

yes completely sorry echoing your comments and also historically obviously the region was seen as you know the hub for capital raising but but there's so many incredible opportunities to deploy capital now in the region as well which makes it a very exciting place uh for funds and we see the inflow of funds uh in Abu Dhabi alone on sort of weekly basis there are announcements uh of funds uh coming here so it's very exciting to be here

on that note Thank you so much for your valuable insight everyone and thanks everyone for staying with us. Thank you so much.

Thank you.

[music]