In an unexpected turn within the investment landscape, the Saudi Arabian Public Investment Fund (PIF) has distinguished itself as the most dynamic sovereign investor of the past year. This development comes at a time when many of its international counterparts, including Singapore’s GIC Pte and Temasek Holdings Pte, have scaled back their expenditures.
The PIF allocated a substantial $31.6 billion in 2023, as indicated by data from Global SWF, a research consultancy. This figure marks an uptick from the $20.7 billion invested in the previous year, standing in stark contrast to the global downtrend in which state-owned investors collectively channeled around $124.7 billion—a significant reduction from the year before.
It was GIC that experienced one of the most notable pullbacks, slashing its capital deployment by 46% to $19.9 billion, which resulted in it losing the title of the world’s most active sovereign wealth fund for the first time in half a decade. Meanwhile, Temasek cut its new investments by over half to $6.3 billion amid market instability, leading both Singaporean entities to face deteriorating returns.
Global SWF highlighted that much of GIC’s reduced activity was in developed markets, though it remained engaged in emerging markets such as India, exemplified by a $1.4 billion partnership with Brookfield India REIT and Temasek’s bolstered investment in Manipal Health Enterprises. “Singaporean investors are being more cautious and we’ve seen that reflected in the numbers,” stated Global SWF. “Gulf sovereign wealth funds have increased their domination of the global transaction activity, to the detriment of Singaporean and Canadian funds, and now represent almost 40% of all investment value deployed by sovereign investors.”
Sovereign wealth funds from Abu Dhabi, Saudi Arabia, and Qatar managed to secure five positions in the top 10 list of most active funds last year. This trend is likely to persist as Gulf nations are anticipated to possess approximately $4.4 trillion in gross foreign assets by the end of 2024, with sovereign wealth funds expected to manage a significant portion of these assets.
The region’s sovereign funds have emerged as a major source of international deal-making capital following a boom in energy prices in 2022 that left many Gulf government budgets with a surplus.
The PIF executed some of the largest sovereign-backed deals of the year, either directly or through subsidiaries. Noteworthy transactions include a nearly $5 billion purchase of US gaming company Scopely by Savvy Games Group and a $3.6 billion acquisition of Standard Chartered’s aviation leasing business via Avilease.
Domestically, the Saudi fund supported the nation’s economic diversification efforts under a strategy championed by Crown Prince Mohammed Bin Salman, who also chairs the PIF. In a substantial move, the fund acquired the steel business of Sabic Basic Industries Corp. for $3.3 billion, driving the PIF’s local investments to represent about 42% of its total investment activity in 2023.
“The variety of deals shows the unparalleled bandwidth and reach of PIF and its subsidiaries,” reported Global SWF, confirming the fund’s expansive influence and capability in the investment arena.