Dubai has bought a 3 percent stake in European hedge fund firm GLG Partners, which has $20 billion in assets under management, through its private equity arm Istithmar.

Istithmar did not say how much it paid for the stake in GLG, which it said was Europe's largest independent alternative asset manager.

GLG plans to expand in the Middle East and will work with Istithmar to provide asset management products in the region.

Khaled Al Kamda, Vice Chairman of Istithmar, said in a statement, 'Istithmar will continue to play the role of a long-term investor and assist GLG Partners in building its presence in the Middle East region.'

The Dubai government in pushing into financial services as part of its plans to diversify its economy and has been buying into Western banks and investment firms through Istithmar and other state agencies.

Istithmar invested $1 billion in Standard Chartered Plc in October and DIFC Investments bought a 2.2 percent stake in Deutsche Bank AG in May, days after Dubai International Capital bought into HSBC Holding Plc.

Dubai wants to create at least two of the world's 10 largest financial services firms by 2015, Omar bin Sulaiman, governor of the Dubai International Financial Centre, said in March.