MergerTalk: Middle East money flows into buyout funds

NEW YORK/DUBAI, June 22 (Reuters) - With oil revenues climbing, Middle Eastern institutional investors are putting more of their money into Western buyout funds.

That's a shift from the past few years, when these investors mostly kept their money local as Middle Eastern markets soared on the back of record high-oil prices.

But overheated stock prices triggered a correction earlier this year, and the Middle Eastern markets tumbled, prompting investors to look westward for opportunities. The Saudi stock exchange, the largest in the region, is down about 40 percent since late February. Dubai's market has fallen 55 percent this year.

Much of the Middle Eastern money is headed to the U.S. private equity funds, which buy companies and sell them later. The sector's huge returns and a friendly debt market have led to record inflows and profits at these funds.

The Middle East has old ties to Western buyout funds, but more money than ever is leaving its cities and landing in New York, according to private equity managers and investors.

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