Ambassador Ahmed Alattar was sent to Berlin two years ago by his country. A graduate of Khalifa University in Abu Dhabi with a degree in Petroleum Geosciences, he began his career at the state-owned oil company Adnoc. „The United Arab Emirates and Germany have maintained relations characterised by trust and respect for more than 50 years“, Alattar asserts. „A significant economic factor in both Germany and the UAE is the transition to lower-carbon energy sources.“

Against this backdrop, both countries entered into a partnership in 2017 focusing on promoting energy efficiency and renewable energies. „A key partner for our country is the German energy company Siemens Energy, which recently inaugurated a Global Innovation Center at Khalifa University in Abu Dhabi,“ explains Alattar. „The goal is to develop partnerships and technologies.“ This center is one of only four of its kind operated by Siemens Energy worldwide. Many other notable German companies, such as BASF and Henkel, are also present in the Emirates. Trade volume has already increased by 40% to 14 billion euros in 2023.

However, the relationship is not one-sided. Arab investors have long had their eye on German firms. The Qatari sovereign wealth fund QIA alone has pumped around 30 billion euros into Germany and holds stakes in German blue-chip companies such as Siemens (4%), VW (17%), Hapag-Lloyd (14.4%) – which also has substantial Saudi Arabian involvement – and Deutsche Bank (6%). But the nature of these investments has changed. While Gulf region sovereign wealth funds were once considered patient – literal silent partners who were welcomed as capital providers in times of need – their motivation is different today.

The new influx of money from the Gulf region is not fragmented simply as financial investments across German and European assets, but is accompanied by an overarching economic strategy. The new generation of corporate and fund managers from the Arab world thinks in terms of master plans, value chains, and knowledge acquisition. The investment approach is both pragmatic and opportunistic. Therefore, Covestro has not been accidentally targeted by Adnoc. The Dax company's stock rose to 61.02 euros in the Covid-19 year of 2021, reaching a high, after which it declined for a long time until speculation about Adnoc's acquisition plans arose last year.

Adnoc has $150 billion dollars available for investments. It has offered 14.4 billion euros for the plastics company, including assumption of debt, and has begun due diligence. The proposed 62 euros per share represents a 60% premium over the June 2023 price, an opportunistic offer given the stock's low point at that time. The takeover would not only be the largest M&A deal in Europe so far this year, but also the first complete acquisition of a Dax company by a state-owned company from the Gulf States.

Accordingly, the transaction is being closely monitored. Moreover, the sovereign wealth fund Adia (Abu Dhabi Investment Authority) and the logistics company Bahri from Saudi Arabia are applying for the purchase of the railway logistics subsidiary DB Schenker. „Our reliability as an energy supplier and our respectful approach are valued – this opens doors for us“, says Klaus Fröhlich, Group Chief Investment Officer of Adnoc.

„We expect more investments from Arab investors in Germany – their activity has significantly increased in recent months“, states Marcus Schenck, Co-Head of Investment Banking for the German-speaking region at Lazard in Frankfurt.

Given the uncertain political and economic situation, with wars and new elections in several countries, Arab investors are a significant driver for M&A. „There are more diverse Arab investors than before looking at investments in Germany,“ notes Christopher Droege, Head of M&A for Germany at Goldman Sachs in Frankfurt. The spectrum ranges from the sovereign wealth fund Adia from Abu Dhabi, through PIF from Saudi Arabia, and the Qatar Investment Authority, to the sovereign wealth fund Mubadala of the United Arab Emirates.

For the railway logistics subsidiary DB Schenker, Arab buyers would indeed be welcome if they offer the highest price. This is evident from the response of the German government to an inquiry from the CDU Parliamentary faction. The response states that the bidding process will be „designed as an open, non-discriminatory procedure in accordance with applicable EU state aid rules.“ A sale to state-owned Arab prospective buyers is thus possible. The decisive factor is who offers the highest price, as long as transaction security is guaranteed. However: „If a foreign investor is to be awarded the contract at the end of the sales process, an investment review will be carried out in accordance with the Foreign Trade Act and the Foreign Trade Regulation“, the German government responded to the CDU inquiry.

Cultural diversity is – at least in the case of the United Arab Emirates – part of the founding identity of the country. Perhaps that's why Siemens Energy CEO Christian Bruch says Abu Dhabi has a „super power“ in the form of connectivity, that brings together people, economy, and science. Or why DWS CEO Stefan Hoops says he can „hardly imagine another place“ than the Emirates where people from countries like the US, China, and India engage in „fact-based“ discussions and set politics aside.

However the more that Arab companies look for investments in Germany and Europe that are evidently more strategic than pure financial investments, the more suspicion this arouses. Currently, Arab investments in European telecommunications companies are in the spotlight, as state-of-the-art networks are critical infrastructure and require special protection, triggering state level attention. Here, too, Arab industry competitors such as e& or STC have seized opportunities as the target companies struggled with business problems and sustained declines in share prices.

e& from the UAE is Vodafone's largest individual shareholder with just over 14%. As per market reports, the Arabs wanted to increase their stake, but this has not happened so far. STC is engaged with nearly 5% in Spanish Telefónica, prompting the Spanish government to increase its own stake. In Germany, the federal government, together with KfW, holds a blocking minority at Deutsche Telekom. The major international shareholder is Softbank, while many other nationalities would likely be viewed with suspicion. Even for DB Schenker, a purchase by an Arab investor would not be a straightforward process.