Saudi Arabia’s Public Investment Fund to surpass Singapore’s GIC with US$31.6 billion splurge in 2023

Saudi Arabia’s Public Investment Fund (PIF) emerged as the world’s most active sovereign investor last year, increasing trading activity even as most of its global peers, including GIC and Temasek Holdings, cut spending.

According to research and consultancy firm Global SWF, PIF injected US$31.6 billion in 2023. This was higher than the previous year’s investment of US$20.7 billion, and contrasted with the broader trend that global state-owned investors invested US$124.7 billion, about one-fifth less than a year earlier.

The decline was led by GIC, which cut capital injections by 46% to US$19.9 billion, losing its position as the world’s most active sovereign wealth fund for the first time in six years. Two Singapore-based investors also reported weaker returns as Temasek saw new investments fall by 53% to US$6.3 billion amid volatile markets.

Global SWF said much of the decline in GIC was related to investments across developed markets. Singapore’s state-owned investors remain active in emerging markets like India, with deals such as GIC’s US$1.4 billion joint venture with Brookfield India REIT and Temasek’s capital increase in Manipal Health Enterprises. It was conducted.

“Investors in Singapore are becoming more cautious and we can see that reflected in the numbers,” Global SWF said. “Gulf sovereign wealth funds have increased their dominance of global trading activity to the detriment of Singaporean and Canadian funds, and now account for almost 40% of all investments deployed by sovereign wealth investors.”

Overall, sovereign wealth funds controlled by the hydrocarbon-rich governments of Abu Dhabi, Saudi Arabia and Qatar occupied fifth place in the list of the top 10 most active funds last year.

This trend is likely to continue. The governments of the United Arab Emirates, Saudi Arabia, Qatar, Kuwait, Oman, and Bahrain will manage approximately USD 4.4 trillion in total external assets by the end of 2024, two-thirds of which will be managed by sovereign wealth funds. Probability is high. According to a report released in December by the Institute of International Finance.

A variety of sovereign funds are based in the region, which will become increasingly important as a source of funding for international transactions after soaring energy prices in 2022 put most Gulf government budgets into surplus. ing.

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PIF, directly or through its subsidiaries, led the year’s largest government-backed transaction. These include the approximately US$5 billion acquisition of US gaming company Scopley through Savvy Games Group and the US$3.6 billion acquisition of Standard Chartered’s aviation leasing business through Avilease.

The Saudi fund was also promoting significant domestic deals to support economic diversification, based on a plan by Crown Prince Mohammed bin Salman, who is also chairman of the PIF.

In September, the fund acquired Sabic Basic Industries’ steel business in a US$3.3 billion deal, bringing PIF’s domestic investments to around 42% of its total 2023 deployment.

“The diversity of transactions demonstrates PIF and its subsidiaries’ unparalleled bandwidth and reach,” Global SWF said in the report.