Goldman Sachs Group Inc is working on raising a Middle East-focused fund and hired a longtime JPMorgan Chase & Co banker to run it, according to people familiar with the matter.

The Wall Street bank has held talks with investors in the region about raising money for the open-ended fund, the people said, asking not to be named as the information isn’t public. Talks are ongoing and the fund’s final size hasn’t been decided yet, they said. 

“We are continuing to expand our presence in Saudi Arabia across divisions,” Fadi Abuali, co-chief executive officer of the firm’s Middle East and North Africa business, said in a statement. A spokesperson declined to give further details on the fund. 

With the move, Goldman joins a raft of rivals across the industry in raising Middle East-focused funds. That marks a shift for the giants of the asset management industry, who’ve long flocked to the region to court sovereign wealth funds and raise money that they would then use to invest around the world. 

Now, under pressure from the sovereign funds, they’re increasingly looking to raise that same money and deploy it within the region.  

Brookfield Asset Management Ltd, for instance, has explored raising separate pools of capital to invest in the Middle East, while Investcorp Holdings, the region’s biggest alternative asset manager, has announced it will set up a US$1 billion investment vehicle backed by Beijing’s sovereign wealth fund that is meant to invest in companies across the Persian Gulf as well as China. BlackRock Inc is seeking to invest in the Middle East, backed by US$5 billion from Saudi Arabia’s sovereign wealth fund. 

Habib Saikaly is joining Goldman as head of the bank’s fundamental equity business across the Middle East and North Africa and is expected to oversee the fund’s development, people familiar with the matter said. A 13-year veteran of JPMorgan, Saikaly will report to Basak Yavuz and Hiren Dasani, the co-heads of Goldman’s emerging market equity division, for the new role, the people said. 

Goldman’s fresh push in the Middle East comes only months after becoming the first Wall Street bank to secure a licence in Saudi Arabia to set up its regional headquarters there. Other major banks are also stepping up efforts to expand in the kingdom which is in the middle of an ambitious economic reform programme. 

  - Bloomberg