Och-Ziff has become the latest American investment firm to seek funding from the Middle East after it sold a 9.9 per cent stake to a Dubai-based group.

The hedge fund, which plans to raise about $1.1 billion (£530 million) in an upcoming flotation, said that it had agreed to sell a minority holding to Dubai International Capital (DIC), the private equity group owned by the ruler of Dubai.

The move comes after The Carlyle Group and Apollo Management, two other large American investment firms, sold stakes to funds backed by the Government of Abu Dhabi. Carlyle sold a 7.5 per cent stake to Mubadala, the investment firm, while Apollo struck a similar deal with another government arm of Abu Dhabi.

This year, Blackstone kicked off the trend when it sold a stake to the Chinese Government ahead of its listing on the New York Stock Exchange. This week it emerged that Carlyle was in talks to sell a stake of itself to China’s Social Security Fund.

For Dubai, the move underscores the emirate’s aim to position itself as a key player in the international private equity scene, alongside the giant American funds such as Carlyle, Kohlberg Kravis Roberts and Blackstone. DIC has already made a name for itself on the international stage after the acquisition, in 2004, of Madame Tussauds, the waxworks museum in London, and Doncasters, the British defence engineering group. Its portfolio also includes a stake in EADS, the parent company of the European aircraft maker Airbus, among dozens of other strategic holdings.

DIC does not class itself as a sovereign fund as it is part of Dubai Holding, a private company owned by Dubai’s ruler Sheikh Mohammed Bin Rashid al-Maktoum. Other Middle Eastern funds, such as the Abu Dhabi Investment Authority, which includes Mubadala, are sovereign-backed because they are owned directly by the Government.

Sameer al-Ansari, the executive chairman and chief executive of DIC, said: “Since inception, DIC has always been keen to align itself with like-minded investors. We hold Och-Ziff in very high regard both as a sophisticated investor and a prominent alternative asset manager.”

Mr Ansari said that the transaction would serve as the basis of a “strategic relationship” between DIC and Och-Ziff, whereby the two would share deal information and pursue global co-investment opportunities and joint ventures. The deal to sell 31.8 million shares to DIC comes after Och-Ziff, which has $30 billion of funds under management, was forced to slash its IPO valuation as investor appetite for the shares fell in the wake of the global credit crisis.

The American hedge fund, which also invests in private equity buyouts, hopes to price its IPO at about $30 to $33 a share. It said that the price of the stake sale to Dubai would not be set until the listing but would not exceed $33 a share.

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