Invest AD is closing its investment banking advisory function, counting among the casualties Alexandre Carre de Malberg – the high profile hire it lured from Rothschild to head up the operation. Is this likely to deter international talent from joining sovereign wealth funds in the future?

The move to disband the “small” investment banking team is down to “market conditions”, said Invest AD in a statement.

Slumping advisory fees

The Abu-Dhabi investment company entered the investment banking fray about a year and a half ago – precisely when things took a turn for the worse. In 2009, total investment banking fees generated in the Middle East were $649m, or a 43% slide on 2008, according to Thomson Reuters figures.

More recently, however, things have been looking up for Middle East investment banking deals. Data from mergermarket shows that the volume of M&A deals in the first quarter of 2010 is up 83% on the same time last year.

International allure

Bill Allum, managing director at headhunters Execuzen, says: “The large sovereign wealth funds still have no difficulty attracting good people, often from international investment banks. Generally, they’re continuing to hire, but selectively rather than as part of large expansion plans.”

Certainly, Carre de Malberg isn’t the only high-profile banker to make the switch to a Middle East sovereign wealth fund. Last year, Bill Schwab joined the Abu Dhabi Investment Authority from JPMorgan to head its real estate division. Thierry Gimonnet also joined Invest AD from Goldman Sachs, while Anders Ljungqvist signed up as its chief investment officer from AB Volvo.

More recently, Anthony Armstrong, previously head of Credit Suisse’s M&A division for the MENA region, joined Qatar Holding and Invest AD hired Jackie Fitzgerald as head of sales and marketing from Shuaa Capital.

Another headhunter suggests that Invest AD’s move won’t put off other international bankers from joining sovereign wealth funds, as “turnover is considered quite high” at the organisation.

New ADIA head

Separately, ADIA has unveiled Sheikh Hamed Bin Zayed Al-Nahayan as its new managing director. He is the brother of Sheikh Ahmed, the SWF’s previous managing director, who died in a gliding accident last month.

Initial reaction from Reuters suggests that commentators are expecting any “significant change” to the fund with the appointment.