Middle Eastern sovereign wealth funds are expected to fare better in the current market environment. The funds, from $21.8 billion in 2021 to $51.6 billion in 2022, reportedly increased their investments in the US and European economies.
According to SWF 2023 Annual Report, with less competition from international peers, Middle Eastern investors are pushing on with their quest for “cheap” properties in Europe (especially the UK) and the US.
Five out of the ten most active investors hail from the Middle East. Abu Dhabi investors are covering all bases, with ADIA most active in North America, Mubadala investing more in Europe in 2022, and ADQ investing across emerging markets. Saudi Arabia’s PIF has been incredibly active both at home and overseas, and Qatar’s QIA is back at the leaderboard thanks to a very active year, as predicted by Global SWF last year.
The report points out that approximately 40 state-owned financial institutions in the Middle East are in charge of $4.8 trillion in assets. Five of the top 10 most active funds represented the Middle East area.
However, 2022 was also the first year that the SWFs’ $1 trillion overall value decreased.
Additionally, the report stated that PPFs had lost $1.3 trillion in assets. However, the average oil price and linkage of their currencies to the dollar have placed the Gulf-based SWFs in a strong position.
“For those GCC economies with lower fiscal expenditure, this translates into large surpluses, which were transferred to some of the SWFs at year-end. Therefore, the large savings funds that are more liquid and internationally focused, including Abu Dhabi’s ADIA, Kuwait’s KIA, and Qatar’s QIA, are set to receive significant inflows of capital,” the report stated.
The funds include sizable portfolios of domestic assets, including Mumtalakat of Bahrain, ADQ and Mubadala of Abu Dhabi, and ICD of Dubai.
Of this year’s 60 mega-deals, i.e., tickets deployed by sovereign investors of US$ 1.0 billion or more, 26 were carried out by Middle Eastern SWFs, and 17 of them were in American or European assets. The largest commitment was made by ADIA, as it invested US$ 4.0 billion in Ardian’s fund ASF IX and US$ 2.0 billion for joint co-investments.
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