Transactions in sovereign wealth funds increase despite macro and geopolitical risks

Published on 05/07/2022

For 2022, direct private transactions by sovereign wealth funds continue to grow, according to transaction data from the Sovereign Wealth Fund Institute (SWFI). However, private cross-border transactions remain stable while domestic and regional direct investment continues to grow. In addition, direct trading, including purchases of public equities, has been higher during the “buy the dip” games made by some sovereign wealth funds during the COVID-19 pandemic. A number of sovereign investors have positioned their dealing teams to target inflation-resistant assets for 2022. For example, from the start of 2020 through March 31, 2022, sovereign investors directly invested $5.447 billion in data center industry, according to SWFI transaction data. Some sovereign wealth funds have steered their bond portfolios towards increasing investment in TIPS, while trying to reduce exposure to US Treasuries.

Direct transactions by sovereign wealth funds by quarter

USD billion

Source: Sovereign Wealth Fund Institute (SWFI) filter: Buyer type: Sovereign wealth fund. Announced at. Offers and new security issues only.

The Sovereign Wealth Fund Institute tracks the investment activities of sovereign wealth funds, pensions, endowments and other institutional investors around the world. For this analysis, SWFI excludes fund commitments, fund platforms and open market transactions, as direct transactions tend to show an investor’s belief in a particular theme. In the first quarter of 2022, sovereign wealth funds invested a total of US$26.995 billion in 107 private transactions, compared to US$20.439 billion and 120 transactions in the first quarter of 2021. In the first quarter of 2021, the real estate and energy investments of the funds Sovereigns were the top picks over real estate and healthcare in Q1 2022. Importantly, most healthcare deals in early 2022 took place before the Russian invasion of Ukraine.

Investments in health

Notable sovereign investor deals in the first quarter of 2022 in the healthcare sector include Abu Dhabi Investment Authority’s investment in AmeriVet Veterinary Partners, a consolidator of veterinary practices. GIC Private Limited and ADIA of Singapore participated as co-investors in Athenahealth.

Sovereign wealth funds have continued to invest in data centers and data center developments. GIC has deposited funds with Equinix to build and operate two xScale data centers in Seoul. A major deal from this period is the agreement of Temasek Holdings of Singapore to purchase Element Materials Technology Limited. Qatar Investment Authority (QIA) has committed capital to Bodhi Tree, a company spun off from James Murdoch, a son of News Corporation’s Rupert Murdoch. It was later discovered that QIA was backing the investor in the takeover of Twitter Inc. by Elon Musk.

Another interesting data deal is private equity firm Warburg Pincus and Mubadala Investment Company buying Pharma Intelligence, a provider of expert intelligence, data and software for clinical trials, drug development and compliance. regulatory, to Informa PLC.

Sovereign wealth funds, especially oil investors, are teeming with cash after years of conservative inflows. Sovereign wealth funds are poised to break through, while traditional investors are reducing their risk appetite and cutting their losses.

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