Sovereigns scoop up top staffers amid ‘dire’ markets

Sovereign wealth funds and other institutional investors in the Mideast and Asia — flush with cash while the rest of the global financial services industry is in a severe shock — are attracting top investment talent.

“Right now, they’re attracting the caliber of talent that they would not have had the opportunity to pick up had conditions not been as dire,” Peter Alexander, founder and principal of asset management consulting firm Z-Ben Advisors Ltd., Shanghai. “But regardless of the financial crisis, these organizations would have been looking for people.”

One such group is Dubai International Capital LLC, a private equity firm based in Dubai, United Arab Emirates, with $13 billion in assets under management. DIC is part of Dubai Holding, an investment company owned by Sheikh Mohammed bin Rashid Al Maktoum, Dubai’s ruler. So far this year, DIC increased its staff to 131 from 87 employees as of Dec. 31, spokesman Mark Lunn said. The move followed a separate announcement by the firm that it plans to double assets under management in the next several years.

Almost all new recruits came from global financial giants in the U.K. and the U.S., including New York-based Morgan Stanley, Merrill Lynch & Co. and Goldman Sachs Group Inc. About 15 were made at the level of “managing director, CEO or director,” said Philip Donnelly, managing director of human resources at the DIC.

On Nov. 2, Alykhan Nathoo — a London-based founding member of private equity company Bain Capital LLC — will join the DIC as chief executive officer of emerging markets. Eric Kump, formerly managing director of Merrill Lynch Global Private Equity, earlier this month was appointed managing director in the private equity division. Marc Hollander was named finance director in the private equity division; he had been managing director in the private equity division of Investor AB, the Nordic region’s largest investment company based in Stockholm.

Another big hiring coup was the summer appointment of David Smoot as managing director in the private equity division. Mr. Smoot is a former managing director and a co-founder of Morgan Stanley Private Equity. He was with the firm for 11 years before moving his family to Dubai from New York.

“Even without the economic crisis, the global trend is toward greater opportunities in emerging markets,” said Mr. Donnelly, who himself arrived about a year ago from London. He was the European head of human resources at Watson Wyatt Worldwide. Dubai is “part of the next wave of financial opportunities globally,” Mr. Donnelly added, “and that’s attractive.”

Other Middle Eastern institutions looking west for top-level investment executives are the Abu Dhabi Investment Authority, the world’s largest sovereign wealth fund. ADIA does not reveal its assets under management, but analysts have estimated total assets range between $650 billion and $900 billion. The Qatar Investment Authority, Doha, with an estimated $60 billion in assets, is searching for investment professionals at all levels. And earlier this year, King Abdullah University of Science and Technology, Thuwal, Saudi Arabia, started searching for a chief investment officer for its new endowment fund, with about $10 billion in assets (Pensions & Investments, April 14).

“The big sovereign wealth funds are hiring, and they’re not just hiring within the Middle East. They’re looking globally,” said Alex Cormack, director and head of the Middle East at recruitment agency Sheffield Haworth based in Dubai. “They’re looking to instill international standards into their organizations.”

Emerging Asia is another region where fund officials have been actively recruiting, according to recruitment agencies and consultants.

China Investment Corp., Beijing, started a recruitment drive last month to add more than 30 investment positions in equities, fixed income and alternatives, among other areas, according to a fund spokeswoman. The CIC also plans to bolster capabilities in asset allocation strategy and risk management. Launched in 2007, the CIC has $200 billion in assets, although about two-thirds is earmarked for capitalizing several China state-owned banks.

Korea Investment Corp., Seoul, has been searching for a head of alternatives, a head of investment strategy and a head of equity finance mortgage. All of the positions are new. The KIC also is looking to expand the alternatives and investment strategy groups to include more analysts and portfolio managers. Also launched in 2007, the KIC has an initial $20 billion in assets.

In Asia, the demand is for talent in all asset classes because many of the funds are relatively new and need to quickly build their investment teams, recruiters said. Private equity and infrastructure are among the specialist skills most in demand in the Middle East, partly because fund officials are seeing acquisition opportunities in the U.S. and Europe as well as emerging markets.

“What I see happening is that international (financial services) professionals are waking up to the fact the global market is changing as a whole — the new powerhouses are in the Middle East and Asia,” Mr. Cormack said. “These sovereign wealth funds are increasingly making a name on the global stage and building their businesses globally.”

Historically, sovereign wealth funds have offered comparable basic salaries but lower bonuses, as the world’s top investment banks, hedge funds and other institutions offer, according to recruiters. Tax breaks and non-payroll benefits such as free housing, company cars and children’s education compensation are helping lure talent.

“In general, compensation (packages) in the greater China market are quite similar to New York or London for senior managers,” said Jenny Li, Beijing-based managing director at Hewitt Associates LLC.

“Culture adaptability is key,” said Ms. Li, who advises on human resources issues pertaining to the financial services industry. “From an employer’s perspective, serious considerations are made as to whether (the candidate) will fit into the culture as well as the market environment.”

Furthermore, the credit crisis has made SWFs more attractive employers because they offer better job security. Financial services professionals who previously didn’t consider SWFs are now knocking on their doors, recruiters said.

At Qatar Investment Authority, the number of applications received by the fund’s human resources department has been steadily rising over the past year, and jumped about 40% in the third quarter of 2008 alone, according to a source familiar with the recruitment process who asked not to be named. The QIC is looking to hire 10 to 15 additional employees for its investment team, including senior executives, portfolio managers and analysts. Applications are coming from the likes of current and former employees at Morgan Stanley and Goldman Sachs.

Contact Thao Hua at [email protected]