Gulf Sovereign Wealth Funds ‘Set to Shine More Than Ever’ in 2023

Sovereign wealth funds in the Gulf are expected to shine more than ever in the next year according to Global SWF’s annual report.

Gulf sovereign wealth funds are expected to become more active and play an even bigger role in global markets this year as they receive large capital injections derived from higher oil revenue, the annual industry report said.

The high expectations come after increasing investments in Western economies by $51.6 billion. Overseas, they more than doubled their investments in western economies, including the U.S. and Europe, to $51.6 billion in 2022, from $21.8 billion in 2021.

Of the top 10 most active sovereign investors in 2022, five were from the Gulf region. Singapore’s GIC was on the top of the list of state-owned investors, with $40.3 billion invested in 2022, 17 percent more than in 2021. It was followed by the Abu Dhabi Investment Authority and Saudi Arabia’s Public Investment Fund.

Abu Dhabi’s Mubadala Investment Company and holding company ADQ, as well as the Qatar Investment Authority, were also in the top 10. 

In 2023 and beyond, Middle Eastern sovereign investors will probably continue to be “very active” in Europe and North America, where there will be many opportunities to buy listed equities or direct stakes, to pursue co-investments or buy into private equity firms, and to find distressed portfolios, the report said.

The report also recognized the emerging strength of the Middle East IPO market.

“While US markets have plummeted, Middle East bourses went from strength to strength. In 2022, the Gulf saw over 50 IPOs raise more than $20bn, the highest ever if we remove Aramco’s listing in 2019. 

“Some of the largest listings, including DEWA in Dubai and Borouge in Abu Dhabi, attracted significant capital from SOIs. The region expects the IPO boom to continue in 2023 across Tadawul, ADX, and DFM exchanges.”

Looking ahead to 2023 and beyond, GlobalSWF analysts say Middle Eastern sovereign investors will continue to seek out investment opportunities in Europe and North America, where there will be more opportunities to buy listed equities or direct stakes.

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