About The Sovereign Wealth Funds
 

About The Sovereign Wealth Funds

A sovereign wealth fund (SWF) is generally a government owned entity comprising a large pool of money that is gathered from the budget surplus or the country’s reserves in order to maintain a consistent economy. It is usually funded by the central bank’s reserves, with money being generated usually from the exports of natural resources such as oil, or through non-commodity means.

In the Middle East for example, the typical aim of a SWF is to provide a type of financial cushioning or “protection” against oil related risks. It is created by the government, which adds a portion of its reserves to the fund. This money will eventually be invested in different types of assets in order to proliferate their revenue streams.

SWFs have recently become a global economic phenomena and are home to USD $5 trillion dollars worldwide and rising every year. It is estimated that if all SWFs continue to grow at this current pace, there is a chance that by 2015 they will exceed the annual economic output of the United States and that of the European Union by 2016.

There are about 20 SWFs holding about USD $1.75 trillion dollars in the Middle East and North Africa (MENA) region. They make up roughly 30% of the total number of SWFs worldwide and 35% of their combined value. Two of the largest SWFs primarily investing in private equity are based in the GCC: Abu Dhabi Investment Authority (ADIA) and Kuwait Investment Authority (KIA).

 

 

Typically, most SWFs allocate their capital across multiple asset classes:

  • Private Equity (buyout, venture, distressed, secondary, mezzanine, funds of funds)
  • Public Equities
  • Fixed Income
  • Hedge Funds (macro, long/short equity, equity neutral, distressed, multi-strategy, event driven, managed futures)
  • Venture Capital (direct Investments and funds)
  • Real Estate (direct Investments and funds)
  • Infrastructure (“greenfield” and “brownfield”)
 

IFC can help you access the investors of the MENA region in a cost efficient and professional manner to maximize your productivity and success