The sovereign wealth funds (SWFs) in the Gulf Cooperation Council (GCC) reached a historical peak of $4.1 trillion (Dh15 trillion) in 2023, investing $75.6 billion (Dh277 billion) in 2023, slightly lower than the previous year, said a report.
The “Oil Five” sovereign wealth funds of the Gulf region – which include the UAE’s Abu Dhabi Investment Authority (Adia), Mubadala and ADQ; Saudi Arabia’s Public Investment Fund (PIF) and Qatar Investment Authority (QIA) – were more active than any other group globally, investing $68 billion (Dh250 billion) in 2023, according to the Global SWF’s annual report released on Monday.
PIF was the lead investor with $31.5 billion deployed in 48 deals, 33 per cent more than in 2022. While the other top four Gulf funds were also again among the top 10 most active dealmakers globally.
“Gulf SWFs have reaped the rewards of the fiscal windfalls and recovered quicker than others from the 2022 financial markets debacle. The other reason is the maturity of the investment landscape, with a wide range of players entering domestic and global markets with a level of sophistication never seen before,” it said in its annual report.
Going forward, Diego López, founder and managing director of Global SWF, said the Gulf SWFs will surely continue to amaze with new developments and grand plans. “The formation of Dubai’s new SWF will send shock waves and we will see plenty of movement of personnel from other SWFs, just like we saw a few years ago with ADQ’s formation. There have also been rumours of rotation of CEOs at some of the largest funds in the region, and we believe some of them may finally happen in 2024,” he added.
López said the recovery of financial markets and sustained high oil prices boosted the industry’s assets under management. “Sovereign wealth funds (SWFs) recovered markedly and peaked at $11.2 trillion; Public Pension Funds (PPFs) increased their assets to $23.1 trillion,” he said in the Annual 2024 Annual Report.
Globally, sovereign funds deployed 21 per cent less in 2023 than the previous year to $123.8 billion in 317 transactions.
Green investments
Sovereign Investors invested, once again, more in the so-called green assets than in the so-called black assets in 2023, reaching a historical maximum of $25.9 billion in support to companies related to the energy transition, including renewable energy, battery storage and electric vehicles.
Gulf SWFs were responsible for almost half of that figure, and are pushing the energy transition agenda and recycling revenues from black assets into green impact investments, particularly in their own backyards.
“Canadian, European, Australian and Singaporean funds are also freeing up plenty of dry powder to plunge capital into achieving their net zero ambitions, with the rest of the funds set to join them in co-investments,” it said.
The recently-concluded COP28, which was held in Dubai, showcased sovereign investors’ approach to sustainability, with the UAE launching a $30 billion climate-focused investment fund with backing from BlackRock and several sovereign funds.