In a remarkable show of financial prowess, the Saudi Arabian Public Investment Fund (PIF) has propelled itself to the forefront as the most dynamic sovereign investor of the past year. While the global community of state-owned investors reined in their expenditures, the PIF charted an opposite course, significantly amplifying its investment endeavors.
According to the data from the research consultancy Global SWF, the PIF channeled a staggering $31.6 billion into various deals in 2023, surpassing its previous year’s investment by nearly $11 billion. This surge starkly contrasted with the overall trend among sovereign investors, who collectively reduced their outlays to $124.7 billion, marking a decline of about 20% from the year prior.
The contraction in investment was most notable in Singapore’s Government Investment Corporation (GIC), which diminished its capital deployment by 46% to $19.9 billion, relinquishing its six-year reign as the top sovereign wealth fund. Similarly, Temasek Holdings, another Singaporean entity, curtailed its new investments by over half to $6.3 billion, amidst market volatility that adversely affected returns.
Despite this, Global SWF highlighted that both Singaporean funds continued to pursue opportunities in emerging markets, such as India. Noteworthy transactions included GIC’s $1.4 billion joint venture with Brookfield India Reit and Temasek’s augmented investment in Manipal Health Enterprises.
Contrasting with the cautious approach of Singaporean entities, Gulf sovereign wealth funds have stepped up their global transaction activity, now accounting for almost 40% of the total investment value by sovereign investors. The hydrocarbon-rich Gulf region, including Abu Dhabi, Saudi Arabia, and Qatar, placed five funds among the top 10 most active last year, indicating a shift in dominance within the sovereign wealth fund landscape.
Looking ahead, it is projected by the Institute of International Finance that by the end of 2024, the six Gulf Cooperation Council countries will hold approximately $4.4 trillion in gross foreign assets, a significant portion of which will be managed by sovereign wealth funds. This forecast aligns with the pattern of sovereign funds from the region becoming increasingly influential in international deal-making, partly due to the financial windfalls from the 2022 energy price surge.
PIF’s prolific investment streak included substantial deals like its near $5 billion purchase of U.S. gaming firm Scopley through the Savvy Games Group and a $3.6 billion acquisition of Standard Chartered’s aviation leasing division via Avilease. Additionally, the fund actively supported Saudi Arabia’s economic diversification agenda, as directed by Crown Prince Mohammed bin Salman, PIF’s chairman. This was exemplified by the fund’s $3.3 billion acquisition of the steel business from Sabic Basic Industries, pushing domestic investments to account for roughly 42% of the PIF’s total investment activity in 2023.
Global SWF’s report commended the PIF for its diverse range of investment deals, underscoring the fund’s expansive capabilities and strategic reach through its subsidiaries.