In a remarkable shift within the sovereign investment landscape, the Saudi Public Investment Fund (PIF) has distinguished itself as the most dynamic sovereign investor worldwide, intensifying its investment activities while many of its international counterparts, notably Singapore’s GIC Pte and Temasek Holdings Pte, have reduced their expenditures.
The Saudi fund, commonly referred to as PIF, injected a substantial $31.6 billion into various deals in 2023, as reported by the research consultancy Global SWF. This indicates a significant rise from the $20.7 billion allocated the year before, marking a departure from the global downtrend. In comparison, total investments by state-owned entities worldwide amounted to $124.7 billion, reflecting a decline of approximately 20% from the previous year.
Significant reductions in investment were observed with GIC, which decreased its capital deployment by 46% to $19.9 billion, relinquishing its title as the foremost active sovereign wealth fund for the first time in half a decade. Temasek followed suit, curtailing its investment ventures by 53% to $6.3 billion amidst a climate of market instability, which adversely affected the returns for these Singapore-based funds.
Global SWF noted that GIC’s investment pullback predominantly concerned developed markets. Nonetheless, Singapore’s state investors maintained a presence in emerging economies such as India, exemplified by transactions like GIC’s $1.4 billion joint venture with Brookfield India REIT and Temasek’s bolstered share in Manipal Health Enterprises.
“Singapore 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.”
Indeed, sovereign wealth funds from hydrocarbon-affluent nations like Abu Dhabi, Saudi Arabia, and Qatar claimed five positions within the top 10 list of most active funds last year.
This prominence is anticipated to persist. According to the Institute of International Finance, by the end of 2024, the United Arab Emirates, Saudi Arabia, Qatar, Kuwait, Oman, and Bahrain are projected to oversee approximately $4.4 trillion in gross foreign assets, with sovereign wealth funds likely managing two-thirds of this wealth.
The region’s sovereign funds have emerged as key players in international deal-making, bolstered by a boost in energy prices in 2022 which led to budget surpluses for most Gulf governments.
The PIF was instrumental in executing some of the year’s most significant sovereign-backed transactions, directly or through its affiliates. Notable deals include the near $5 billion purchase of the US gaming enterprise Scopley by Savvy Games Group and the $3.6 billion acquisition of Standard Chartered’s aviation leasing business through Avilease.
Domestically, the Saudi fund is also a catalyst for economic diversification, aligning with the vision of Crown Prince Mohammed Salman, who also serves as the PIF chairman. In a strategic move, the PIF acquired the steel unit of Sabic Basic Industries Corp in a $3.3 billion transaction, propelling its local investments to about 42% of its total deal-making activity in 2023.
“The variety of deals shows the unparalleled bandwidth and reach of PIF and its subsidiaries,” observed Global SWF.