NEW YORK (Reuters) – Morgan Stanley, a U.S. investment bank keen to expand in the Middle East, said on Wednesday it would form a joint venture with a Saudi Arabia securities firm, Riyadh-based Capital Group.
The deal to create Morgan Stanley Saudi Arabia is expected to be completed before the end of the first quarter. The terms of the transaction were not disclosed.
“The Kingdom of Saudi Arabia is a key market both for us and our clients around the world,” said Georges Makhoul, Morgan Stanley’s president for the Middle East and North Africa.
The Capital Group, founded by Fahad Almubarak in 2001, holds licenses from Saudi Arabia to offer advisory, banking, asset management and trading. Almubarak, educated in the United States, was general manager of Rana Investment Co. in the 1990s.
He also helped represent the country during contentious natural gas project negotiations with ExxonMobil, Shell Oil and other foreign energy companies.
The joint venture initially will employ 25 professionals in banking, underwriting, trading asset management and wealth management.
Wall Street firms have been expanding overseas, eager to secure new private and corporate clients in fast growing markets. Morgan Stanley in particular targeted the Middle East, where years of high energy prices have generated enormous wealth and spurred local economies.
Morgan opened its first office in the region in Dubai last March and secured a banking license in Qatar in October. Morgan Stanley expects the Qatar office to be opened before the end of May.
In a separate emerging markets deal, Morgan Stanley said on Wednesday it paid $152 million (6.75 billion rupees) for a stake in Mumbai, India-based property developer Oberoi Constructions, which builds luxury apartments and offices.
Morgan Stanley, a major real estate investor, has been increasingly active in India and China as housing markets in the United States slow. The stake was purchased through Morgan Stanley Real Estate Special Situations Fund III.