< PreviousCOVER STORY fi nancemiddleeast.com20 | October 2025 Photography by: Ajith Narendra FROM CAPITAL EXPORTER TO CAPITAL MAGNET Janus Henderson’s Meshal AlFaras on why the Gulf is no longer just sending capital abroad, it’s becoming a destination of choice for global allocators Words by: Nivetha Dayanand FME_Oct2025_20-25_Cover story _13726095.indd 20FME_Oct2025_20-25_Cover story _13726095.indd 2003/10/2025 21:3103/10/2025 21:31COVER STORY fi nancemiddleeast.comOctober 2025 | 21 FME_Oct2025_20-25_Cover story _13726095.indd 21FME_Oct2025_20-25_Cover story _13726095.indd 2103/10/2025 21:3103/10/2025 21:31COVER STORY fi nancemiddleeast.com22 | October 2025 The global investment map is being redrawn, and the Middle East is fi rmly at its centre. Once defined largely as a supplier of global capital, the region is increasingly becoming a destination for it. Sovereign wealth funds, family offi ces, and institutional investors across the Gulf are not just deploying money overseas, they’re now inviting the world to participate in their own growth story. It’s a shift underpinned by aggressive domestic economic reform agendas, a rising appetite for private capital in infrastructure and technology and a new generation of investors pushing for greater diversifi cation and sophistication. Few are better placed to assess this evolution than Meshal AlFaras, Head of Middle East, Africa, and Central Asia at Janus Henderson Investors. With decades of experience bridging global asset management and regional allocators, AlFaras is helping to shape what the next phase of investment in the region will look like, from pioneering Shariah- compliant structures in alternatives, to responding to the rising demand for private credit and sustainable investing. Crucially, as Gulf markets deepen and regulatory regimes gradually harmonise, global fi rms like Janus Henderson are fi nding new opportunities, not just to raise capital, but to allocate it in. A key trend: sovereign wealth funds and large family offi ces across the GCC are hunting for tailored solutions across private markets, ETFs, and impact investments. And they’re doing so with growing expectations around governance, transparency and alignment with regional values. AlFaras outlines how the region is moving beyond its capital-exporting roots. He breaks down the regulatory headwinds, the gaps in the Islamic investment landscape, and how cities like Dubai and Abu Dhabi are emerging as rival, but complementary, fi nancial hubs. He also explores why Gulf allocators are doubling down on private markets, how tech is reshaping real asset investing, and what it will take for regional markets to make the leap from ‘emerging’ to ‘developed’ status. For global managers looking to play a long game in the Gulf, the message is clear: bring local knowledge, fl exible product structures, and a commitment to long-term presence, or risk being left behind. How has the role of the Middle East in global asset management evolved from being a capital exporter to becoming a destination for institutional capital deployment? The Middle East has long been recognised as a global source of capital, particularly through its sovereign wealth funds and institutional investors. What we are seeing now is a signifi cant shift —the region itself is increasingly becoming a destination for international capital. This refl ects the scale of domestic economic transformation programmes, the acceleration of infrastructure and private sector development, and the appetite for diversifying funding sources. International investors are looking to participate in this growth story, particularly in sectors such as energy transition, logistics, financial services and technology. The region is no longer just sending capital abroad; it is actively competing to attract global infl ows. You’ve been pioneering new Shariah-compliant fund structures. What gaps do you see in the current Islamic investment market, and how can innovation address them? Despite the size and importance of Islamic fi nance, many investors still fi nd that their choices are limited to traditional asset classes, such as equities and sukuk. What is missing are innovative structures that provide exposure to private credit, infrastructure and alternative investments—areas that are critical for portfolio diversifi cation and risk-adjusted returns. By developing Shariah-compliant fund structures in these areas, we are aiming to broaden the investable universe for Islamic investors. Innovation in structuring, governance and transparency can help bridge this gap, enabling Islamic capital to access the same breadth of opportunities available to global investors while remaining fully aligned with Shariah principles. How critical is local expertise in building trust with Gulf allocators? Local expertise is essential. Many investors in this region place a premium on relationships, cultural understanding and long-term commitment. It is not Dubai’s DIFC continues to position itself as a regional base for global asset managers. $4 TRN The estimated assets under management (AUM) of Middle East sovereign wealth funds, capital that is now increasingly being deployed at home, not just abroad. FME_Oct2025_20-25_Cover story _13726095.indd 22FME_Oct2025_20-25_Cover story _13726095.indd 2203/10/2025 21:3103/10/2025 21:31COVER STORY fi nancemiddleeast.comOctober 2025 | 23 reduce friction, improve scale and make the region even more attractive for global allocators. You’ve advocated for the reclassifi cation of Gulf markets from “emerging” to “developed.” What structural changes are still needed to achieve this shift? The Gulf markets have already made remarkable progress. They have diversifi ed their economies beyond oil, investing in infrastructure and technology, leading to stable growth and enhanced fi nancial resilience. Their high sovereign credit ratings and tight bond spreads indicate strong investor confi dence and market stability. Reclassifying the UAE and KSA as developed markets, and Oman and Bahrain as emerging markets, would acknowledge their achievements and attract a broader range of investors, further supporting their global standing and continued growth. Some of the structural changes that are in process will help to enhance transparency and disclosure standards, broaden the investor base with deeper retail participation and continue to expand the availability of derivatives and hedging tools. The trajectory is clearly positive. enough to off er a global track record; you also need to demonstrate that you understand the region’s regulatory environment, investor expectations and Shariah requirements where relevant. Having people on the ground, engaging in continuous dialogue and tailoring solutions to local needs are what build trust. In our experience, Gulf investors value managers who can combine global insight with regional nuance and who are prepared to commit resources locally. What are the most pressing product needs you see among sovereign wealth funds, pension funds and family offi ces in the GCC and how is the industry adapting to meet them? We see a range of consistent themes across investor types. Firstly, there is a strong appetite for private market strategies, particularly private credit, infrastructure and real assets, which provide both diversifi cation and long-term yield. Secondly, there is rising demand for Shariah-compliant alternatives, to ensure alignment with cultural and religious values without sacrifi cing performance or innovation. Thirdly, investors are increasingly looking for products that combine income generation with strong risk management. ETFs are well suited to these needs, off ering effi ciency, cost-eff ectiveness and daily liquidity—qualities that resonate strongly in a market where investors are becoming more sophisticated in their portfolio construction. We are also seeing an increasing focus on sustainability and impact, where GCC investors are looking to make a diff erence within their communities. The industry is responding by creating more specialised vehicles, deepening co-investment opportunities and building structures that combine global best practices with regional priorities. How do diff erences in regulatory regimes across the GCC aff ect product design and cross-border investment fl ows? What progress are you seeing on harmonisation? There has been good progress in recent years, but diff erences in regulatory frameworks still create complexity for asset managers and investors. Variations in fund passporting rules, licensing regimes and Shariah standards can make it challenging to design products that work seamlessly across all jurisdictions. That said, there is clear momentum toward harmonisation. Ongoing eff orts by regulators to align listing, disclosure and fund management standards are creating a more integrated investment landscape. Over time, greater convergence will You need more than a global track record, you need local credibility, cultural fl uency and commitment on the ground FME_Oct2025_20-25_Cover story _13726095.indd 23FME_Oct2025_20-25_Cover story _13726095.indd 2303/10/2025 21:3203/10/2025 21:32COVER STORY fi nancemiddleeast.com24 | October 2025 Meshal Jaber AlFaras receives his Finance Middle East Award for advancing Janus Henderson’s growth and regional strategy. FME_Oct2025_20-25_Cover story _13726095.indd 24FME_Oct2025_20-25_Cover story _13726095.indd 2403/10/2025 21:3203/10/2025 21:32COVER STORY fi nancemiddleeast.comOctober 2025 | 25 With Gulf investors increasing allocations to private credit, real estate and other alternatives, what risk and return dynamics are shaping those choices today? Investors in the region are looking for diversifi cation and resilience at a time of heightened global volatility. Private credit off ers attractive risk-adjusted returns, particularly in a higher-for-longer interest rate environment, while also providing access to mid-market borrowers who may not be well served by traditional banks. Real estate remains a core allocation, but with a sharper focus on logistics, healthcare and data infrastructure rather than just traditional offi ce and retail. Alternatives more broadly are seen as a hedge against infl ation and as a way to access long-term secular growth themes. Investors are broadening their alternatives allocations, which is why our affi liate, Privacore, plays an important role in providing access to private markets strategies in structures designed for institutional portfolios. Together, our ETF platform and Privacore’s alternative off erings enable us to serve investors with a full spectrum of solutions. One area where we have seen considerable traction is in alternative credit. As the largest provider of AAA CLO ETFs globally, Janus Henderson has been able to give investors access to high-quality, diversifi ed exposure to the senior-most tranche of the collateralised loan market, which combines defensive credit characteristics with attractive yields. How are AI and deep tech reshaping real asset investing, and what opportunities do you see for the Middle East to lead in this space? AI and advanced technologies are transforming how we assess, manage and extract value from real assets. From predictive analytics for real estate demand to AI-driven optimisation of infrastructure and energy assets, technology is creating effi ciencies and new investment opportunities. In the Middle East, there is a unique opportunity to lead because governments are committed to embedding AI into national strategies, and signifi cant capital is being directed toward smart cities, digital infrastructure and advanced manufacturing. For asset managers, this means integrating technology into how assets are developed and managed, creating new value chains in which the region can play a global leadership role. Family offices in the region are becoming more sophisticated. How are their investment philosophies and governance models changing compared to a decade ago? Family offi ces in the region used to be primarily focused on preserving wealth across generations, with a heavy tilt toward traditional assets and local real estate. Today, we see far greater sophistication, from institutionalised governance models and professional investment committees to broader global diversifi cation and active participation in private markets. There is also a sharper focus on sustainability, succession planning and impact investing, refl ecting the priorities of the next generation of family members. Family offi ces are increasingly operating like institutional investors, but with the agility to move quickly into emerging opportunities. Interestingly, we’re also seeing growing interest in Global Small cap investment, which is an area that off ers higher yield than private equities while providing liquidity and transparency. With Abu Dhabi and Dubai strengthening their positions as fi nancial centres, how do you see competition and collaboration between regional hubs infl uencing global asset fl ows? Abu Dhabi and Dubai are complementary in many ways. Abu Dhabi brings deep sovereign capital and a strong base of institutional investors, while Dubai has built a highly connected ecosystem for global asset managers and fi nancial services fi rms. The interplay between the two strengthens the region’s overall value proposition, positioning the UAE as a gateway for global capital into the Middle East, Africa and South Asia. Over time, collaboration across hubs will be key to scaling regional markets and cementing the Gulf’s role in global asset fl ows. Gulf investors are broadening their alternatives allocations, they want resilience, yield, and real diversifi cation Energy giants like Aramco are drawing capital into the Gulf’s transition strategies. FME_Oct2025_20-25_Cover story _13726095.indd 25FME_Oct2025_20-25_Cover story _13726095.indd 2503/10/2025 21:3203/10/2025 21:32SPOTLIGHT fi nancemiddleeast.com26 | October 2025 Words by: Nivetha Dayanand COULD BNPL BECOME THE NEXT SUBPRIME? BNPL is reshaping how Gen Z manages money, fl exible liquidity for now, with watchpoints on stacking and transparency aheadSPOTLIGHT fi nancemiddleeast.comOctober 2025 | 27SPOTLIGHT fi nancemiddleeast.com28 | October 2025 When headlines compare Buy Now, Pay Later (BNPL) schemes to the risky lending practices of the pre-2008 era, the question is whether this growing phenomenon could trigger something similar to the subprime mortgage crisis. The parallels are tempting: easy credit, rapid growth and a youthful borrower base often living on tight budgets. But industry experts urge caution before drawing such conclusions. “BNPL is not the new subprime,” said Piyush Dubey, Partner at Kearney Middle East & Africa’s Financial Services Practice. He pointed out that the structure of these loans, short-dated, frequently autopaid and modest in ticket size, diff ers fundamentally from long-dated, high-risk mortgage lending. “Loss dynamics and duration diff er: credit card charge-off s hover near ~4%, while recent Affi rm cohorts track toward ~3.5% ultimate net charge-off s and Klarna’s 2023 consumer credit losses were 0.38% of GMV,” he explained, highlighting how exposure remains contained. His colleague, Vagan Esaian, Associate at Kearney, added that the real risk lies in what we cannot see. “The genuine watchpoint is opacity across lenders and loan-stacking by heavy users, which can mask stress even when headline losses look benign,” he stressed. In other words, while defaults may look low on the surface, multiple commitments spread across platforms could create hidden vulnerabilities. A CULTURAL SHIFT IN LIQUIDITY Beyond the systemic question, BNPL is changing how Gen Z approaches liquidity. $82.4 B the surge of US BNPL purchases in 2024SPOTLIGHT fi nancemiddleeast.comOctober 2025 | 29 Many commentators see the surge of instalment-based festival ticket purchases, such as the 60% of Coachella attendees opting for BNPL, as evidence of fi nancial distress. Esaian disagrees. “Coachella’s BNPL refl ects Gen Z’s evolving liquidity culture rather than distress,” he explained. The plan is structured as prepaid instalments (a fl at ~$41 fee, no interest, paid off before the festival)—closer to layaway than debt.” Dubey noted that this trend mirrors what he calls a “treat culture”, where young consumers indulge in frequent small luxuries like subscriptions, coff ees or event tickets. “These patterns show a preference for smoothing cash fl ow and celebrating micro-moments, not necessarily over-extension,” he said. But he warned that Gen Z’s thinner fi nancial buff ers mean the danger lies in stacking such commitments, which over time can constrain budgets. This is highlighted in research. Surveys in the UK found that while most adults had no BNPL debt at all, around 22% of users had missed at least one repayment in late 2023. At the same time, US BNPL purchases surged to $82.4 billion in 2024, up almost 10% year on year, highlighting the model’s popularity even as questions remain about sustainability. SHORT-DATED LOANS Supporters of BNPL argue that short maturities insulate both lenders and borrowers. “Short-dated, low-ticket BNPL does offer insulation: the typical pay-in-four loan is fully repaid within six weeks, with a median ticket around $108,” Dubey explained. The statistics back this up; even deep subprime borrowers repaid 96% of BNPL loans and defaults remained well below those on credit cards. Yet Esaian pointed to user behaviour as a critical watch point. “Roughly 63% held multiple simultaneous BNPL loans in 2021-22, with one-third spread across diff erent fi rms,” he noted. That stacking, he argued, can distort the picture, making cohorts appear stable while pockets of stress build under the surface, especially in discretionary categories like concerts or lifestyle purchases. NORMALISING DEBT OR REDEFINING SPENDING? W i t h housing af f o rdabili t y lo w , employment precarious and living costs rising, some economists see Gen Z’s embrace of BNPL as troubling. But Dubey encouraged a broader view. “Gen Z’s use of BNPL for discretionary purchases must be read in context,” he said. “This cohor t, about a quar ter of the g l oba l popu l a tion with fa s t- g rowi n g spending po w e r, operat es w i t h a ‘treat culture’ of small, frequent rewards. Rising housing costs and precarious jobs thin their buff ers, but BNPL’s short-dated, autopaid design makes it more a liquidity tool than a debt trap.” Esaian added a cultural perspective: “As with many innovations, the pattern is often perceived as critical, yet it may simply mark a new age of f inancial behaviour. While defaults may look low on the surface, multiple commitments spread across platforms could create hidden vulnerabilities Next >