《IE大学&ICEX:2023年主权财富基金报告(英文版)(76页).pdf》由会员分享,可在线阅读,更多相关《IE大学&ICEX:2023年主权财富基金报告(英文版)(76页).pdf(76页珍藏版)》请在三个皮匠报告上搜索。
1、SOVEREIGN WEALTH FUNDS 2023Investing in a Different World OrderCenter for the Governance of Chan?eEditorJavier Capap Aguilar,PhDAdjunct Professor and Director,Sovereign Wealth Research,Center for the Governance ofChange,IE UniversitySOVEREIGN WEALTH FUNDS20233Index4 Preface7 Executive Summary11 Chap
2、ter 1.Investing in a Different World Order:Sovereign Wealth Funds 202331 Chapter 2.Growth and Green:Sovereign Wealth Funds Engage into Sustainability42 Chapter 3.Sovereign Wealth Funds in Latin America:the post-Pandemic Scenario52 Chapter 4.Sovereign Wealth Funds in Venture Capital:A Successful Adve
3、nture?63 Annex 1.IE Sovereign Wealth Research Ranking 202370 Annex 2.Sovereign Wealth Funds in Spain:A Resilient PatternPREFACEMara Pea MateosChief Executive Officer,ICEXManuel Muiz Provost,IE University andDean,IE School of Global and Public Affairs5PrefaceIt gives us great pleasure and satisfactio
4、n to present the 2023 edition of the Sovereign Wealth Funds Re-port,a key reference for understanding the activity and trends of these important financial investors.This report is the outcome of a partnership between ICEX Espaa Exportacin e Inversiones and the So-vereign Wealth Research center of th
5、e IE Center for the Governance of Change.This edition is marked by the extraordinary cir-cumstances arising from the Ukrainian conflict and its consequences for the economy.From this pers-pective,sovereign fund activity is taking place in a period of great uncertainty in geopolitics and the global e
6、conomy.The consequences of the war in Ukraine have particularly manifested in a gradual increase in inflation in 2022 and 2023,which is sti-ll determining the monetary policy of the major central banks.Benchmark interest rates have the-reby been raised across the board,with the goal of containing th
7、e inflationary spiral,which is condi-tioning both global economic growth expectations and the functioning of financial markets.There are other elements of uncertainty of a different,more structural nature that impact markets,such as dis-ruptions in global value chains,the threat of clima-te change a
8、nd the rise of disruptive social and poli-tical movements.In this scenario,in a forecast subject to considera-ble uncertainty,the International Monetary Fund(IMF)estimates that global growth will fall from 3.4%in 2022 to 2.8%in 2023,before stabilising at 3.0%in 2024.It also expects advanced economie
9、s to slow sharply,from 2.7%in 2022 to 1.3%in 2023.In such a situation,the US would fall from 2.1%to 1.6%growth and the Eurozone from 3.5%to 0.8%.Emerging economies are expected to maintain their level of activity with 4%growth in 2022 and 3.9%in 2023,with a slower than expected acceleration for Chin
10、a,from 3%to 5.2%in 2023,and a deceleration in other emerging regions such as Latin America 1(from 4%to 1.6%)and India(from 6.8%to 5.9%).Moreover,headline inflation should decline from 8.7%in 2022 to 7.0%in 2023 due to the fall in com-modity prices,although core inflation should decli-ne more slowly.
11、The foreign direct investment(FDI)landscape was hit hard by the Russian invasion of Ukraine,rising energy and food prices and debt pressures.This high uncertainty determines a scenario in which FDI operations might be slowed down pending an improvement in the economic situation.In this context,FDI f
12、ell by 12%in 2022 to$1.3 trillion,af-ter the strong recovery in 2021 following the pan-demic,according to UNCTAD.The fall was mainly due to lower financial flows and transactions in de-veloped countries and a 37%drop in cross-border operations of multinationals from developed coun-tries.For 2023 in
13、general,this scenario,marked by geopolitical tensions and high financing costs in a context of high interest rates,is likely to continue.Sovereign wealth funds are not immune to these global dynamics,although their evolution is not always predictable.For example,SWFs continued to accumulate more wea
14、lth in these months and their assets under management surpassed the$11 trillion barrier for the first time.This 11%growth in assets had its greatest impetus in funds from the Middle East and East Asia.South American SWFs,though small,almost doubled their AUM,buoyed by rising international copper and
15、 oil prices.The 2023 Sovereign Wealth Funds Report analyzes direct investments by SWFs from January 2022 to March 2023.The study evaluates 376 investments in 2022,with a total transaction value of$95 billion.Although the current sample size is smaller than its predecessor,it is triple the sample siz
16、e of the 2020 Report.In 2022,the SWFs focused their activity on technology(they are already seven years of leaders-hip in the tech sector),real estate and the industrial sector.The three sectors accounted for around 66%6SOVEREIGN WEALTH FUNDS 2023.PREFACE6of all investments,each attracting close to$
17、21 bi-llion.The healthcare sector managed to attract so-vereign investments valued at$9.8 billion and esta-blished itself as the sector with the highest number of co-investment transactions between SWFs.The technology sector saw significant transactions in software and e-commerce,while the industria
18、l tar-gets favored climate-related technologies,agritech,and logistics.With just 25 transactions,the real es-tate sector ranked third in investment volume,buo-yed by the funds search for alternatives to stocks and bonds for long-term growth.A comparison of data from the current and previous reports
19、provides insight into SWF activity during the pandemic period(October 2020 to December 2021)and the recovery period(January 2022 to March 2023).Top funds such as Temasek,Muba-dala,GIC,ADIA,and QIA maintained their leading positions as the most active dealmakers.Yet,for the first time in our Report s
20、eries,GIC is no longer the second most active SWF to Temasek,but Mubadala.The allocation of investments across sectors tran-sitioned from a primary focus on technology du-ring the pandemic to a more balanced distribution across technology,industrials,real estate,financial,and healthcare sectors duri
21、ng the recovery period.The geographical distribution of SWF direct invest-ment continues to favour the largest economies,but it reveals two incipient trends that could be consolidated in forthcoming reports.First,the US accounted for 59%of global transactions volume in the recovery period(from just
22、22%in the pandemic period),showing a deep concentration of SWFs deal volume in the country.Secondly,China,whose eco-nomy suffered from healthcare-based restrictions and recent geopolitical concerns in the Report sam-ple period,witnessed SWFs investments dropping to half in deal value and the number
23、of transactions.The Report focuses on three other themes this year:the green energy transition,the role played by funds in Latin America and the Caribbean,as well as the performance of SWFs investing in venture capital.In 2022,no SWFs invested in oil related projects in 2022,showing a credible commi
24、tment toward a low carbon economy.The chapter uncovers a systematic approach toward green investment opportunities,beyond renewable energy infrastructure,and inclu-des deals in electric vehicle companies,sustainabi-lity businesses,and agritech.Also,the 2023 Report spotlights the activity of the SWFs
25、 from the Latin America and the Caribbean.SWFs helped stabilise the fiscal health of governments during the Covid crisis as half of the SWF resources went towards mitigating the economic and social impacts of the pandemic in the region.By 2022,these funds recei-ved new deposits totalling$8.5 billion
26、.Copper and oil prices drove this resurgence.Lastly,the Report delves into the technology sector and analyzes,for the first time,the SWFs investment performance in venture capital.SWFs have sought to get exposed to innovation and technology for many years.Yet,venture capital is a complex asset class
27、 that suffers a severe correction since October 2021 affecting heavily those SWFs that joined late.The chapter identifies round-specific and deal-specific factors that explain SWF performance in this complicated although relevant innovation engine.Mara Pea MateosChief Executive Officer,ICEXManuel Mu
28、iz Provost,IE University andDean,IE School of Global and Public AffairsEXECUTIVESUMMARY8 8SOVEREIGN WEALTH FUNDS 2023.EXECUTIVE SUMMARY.8Executive SummaryINVESTING IN A DIFFERENT WORLD ORDER:SOVEREIGN WEALTH FUNDS 2023 The year 2022 saw geopolitical tensions,su-pply chain disruptions,inflation,weak
29、stock and fixed-income returns,and mixed performance in financial markets.In this turbulent context,Sovereign Wealth Funds expanded their global footprint,with Assets Under Management(AUM)rising 11%in the period from$10.39 trillion in 2021 to$11.6 trillion.This growth primarily stem-med from the Mid
30、dle East and Eastern Asia,which saw increases of 15%and 11%,respectively.While still tiny players,South Americas SWFs boasted a near-doubling of AUM,spurred by revenue from copper and oil price tailwinds.SWFs remained active in 2022 and participated in 376 deals across 354 unique transactions,amoun-
31、ting to$95.2 billion of investment value.In the first quarter of 2023,SWFs were part of 49 transac-tions with a combined value of$23 billion.The top sixTemasek,GIC,Mubadala,Abu Dhabi Invest-ment Authority,Qatar Investment Authority,and Public Investment Funddominated the field and were involved in m
32、ore than 80%of the deals.The US remained the most attractive destination for SWF investments,taking 60%of the total value of deals involving SWFs,while another 27%was distributed among the UK,India,China,and Saudi Arabia.The Middle East also attracted significant foreign direct investment(FDI)in the
33、 post-Covid period,with the UAE,Saudi Arabia,and Qatar be-coming leading countries for FDI destinations.SWFs favoured technology again as their most preferred sector for the ninth year in a row,fo-llowed by the real estate and industrial sectors.The healthcare sector also saw significant activity.Th
34、e two largest deals involving SWF investments were in Store Capital Corp and Emerson Climate Technologies,both US-based,for$13.8 billion and$11.8 billion,respectively.1Data comparison between the current and the last report revealed SWF behaviour during the pande-mic period(October 2020 to December
35、2021)and the recovery period(January 2022 to March 2023).Leading funds like Temasek,Mubadala,GIC,ADIA,and QIA consistently keep their lead.The United States solidified its position as the preferred desti-nation,capturing 60%of the deal value associated with SWF investments during the recovery period
36、,compared to 22%during the pandemic period.The sector allocation saw a shift from a dominant focus on tech during the pandemic period to a more even distribution across tech,industrials,real estate,fi-nancial,and healthcare during the recovery period.9GROWTH AND GREEN:SOVEREIGN WEALTH FUNDS ENGAGE I
37、NTO SUSTAINABILITY SWFs have shifted their investments from conven-tional oil-related industries to green technologies.From January 2022 to March 2023,all of the invest-ments in the energy sector were linked to renewa-bles,with no deals in oil and gas,for the first time since the research database w
38、as established.SWFs play a crucial role in the energy transition,now focusing on energy networks and energy storage.SWFs such as Abu Dhabi Investment Authority,New Zealand Superannuation Fund,and Mubadala Investment Company have invested significantly in these areas.SWFs have also diver-sified their
39、 sustainability investments,allocating funds to electric vehicle companies,sustainability businesses,and the agritech sector.The report further examines the influence of SWFs beyond the energy sector.It discusses the One Planet SWFs(OPSWF)initiative and assesses the substantial progress made by SWFs
40、 in recent years,including the establishment of an inaugu-ral internal ESG Report by the Kuwait Investment Authority,the new membership of the SWF of Gabon(FGIS)in the UN-convened Net-zero Asset Owner Alliance,or the pledge by TSFE to invest$40 billion in green hydrogen projects.SWFs have emerged as
41、 significant drivers in the transition towards renewable energy and broader sustainability.Their investments not only attest to the growing importance and potential of renewa-ble energy but also illustrate the commitment of SWFs,as government-owned institutions,to consi-dering climate and transition
42、 risks as part of their long-term investment philosophies and modus operandi.SWFS IN LATIN AMERICA:THE POST-PANDE-MIC SCENARIO The region,hit hard by a significant GDP loss in 2020 due to the Covid-19 pandemic,saw substan-tial growth rates in 2021 and 2022.SWFs helped stabilize the fiscal health of
43、governments during the crisis.Half of the SWF resources went towards mitigating the economic and social impacts of the pandemic.By 2022,these funds received new deposits totalling$8.5 billion.Copper and oil prices drove this recovery,especially in Peru,Chile,and Guyana.Yet,SWFs in other parts of the
44、 region struggled with rising interest rates,receiving no new deposits since 2019.Major oil discoveries drastically changed Guyanas economic fate.Growth in Guyanas SWF,driven by oil revenues,places Guyana uniquely within Latin America.A per capita analysis identifies it as the largest in the region.
45、Despite political instability,the partnership between SWFs and development banks and insti-tutions offers a significant opportunity for sustai-nable economic growth.The chapter explores the potential for creating enduring relationships be-tween SWFs and development finance institutions.By combining
46、their resources and expertise,these alliances can finance vital infrastructure projects and promote sustainable growth in line with their growth objectives.This synergy holds promise for the future,potentially transforming the economic landscape of Latin America.1010SOVEREIGN WEALTH FUNDS 2023.EXECU
47、TIVE SUMMARY.10SOVEREIGN WEALTH FUNDS IN VENTURE CAPITAL:A SUCCESSFUL ADVENTURE?Over the last decade,SWFs asset allocation has shifted towards riskier alternative assets in private equity and venture capital,particularly in the most innovative sectors.SWFs have used multiple stra-tegies to attract i
48、nnovation to their economies and have followed different paths to get exposed to the fastest-growing companies disrupting incumbent industry players.This chapter focuses on one typically under-ex-plored dimension:the investment performance of SWFs in the technology sector,particularly on their ventu
49、re capital deals.The report analy-ses first the severe correction of the VC industry,which started in the last quarter of 2021.With that scenario in mind,a novel database of relevant di-rect investment transactions by SWFs into private technology companies made during the“boom VC years”is introduced
50、 and analysed.The analysis provides a list of the relevant deal and round-specific factors that can help explain diffe-rences in investment performance.On average,the chapter finds that targets which were Asian-based,within the delivery sector,in earlier stage rounds tended to outperform their peers
51、 within the time frame of the analysis.Digital“bit”businesses had stronger returns in the short run;however,the performance of physical“atom”businesses was more resilient over time.Follow-on investments had similar returns to one-off investments.And finally,while investment rounds led by SWFs were l
52、ess successful than those from other institutional investors,the performance gap has decreased over time.All of these factors appear to be relevant even when accounting for selection bias in the sample,indicating that they can be complementary to the existing theoretical framework that unders-tands
53、SWFs as learning organisations.The technology investment process has enhanced capabilities,opened new markets and provided a more balanced portfolio to SWFs.The risks,thou-gh,of investing in companies with inflated valua-tions and cash-burning business models are not exempt from serious risks.Which
54、SWFs will conti-nue their VC strategies after this painful collapse?Only those SWFs with the appetite for that kind of risk,a long-run investment plan,with capabilities and specialised teams in place,and also those with the ability to transform tech investments into stra-tegic economic advantages.Th
55、e insights provided in this chapter around deal-and round-specific factors can provide grounds to gain a deeper com-prehension of what makes the SWFs investment strategies in tech successful and potentially bene-fit a wide range of sovereign stakeholders.INVESTING IN A DIFFERENT WORLD ORDER:SOVEREIG
56、N WEALTH FUNDS 2023 Javier Capap(PhD),Director,Sovereign Wealth Research,IE Center for the Governance of Change Rodrigo Arce(Mba),Associate Director,Sovereign Wealth Research,IE Center for the Governance of Change 112SOVEREIGN WEALTH FUNDS 2023.INVESTING IN A DIFFERENT WORLD ORDER:SOVEREIGN WEALTH F
57、UNDS 2023121.Investing in a Different World Order:Sovereign Wealth Funds 2023The year 2022 was marked by a series of significant geopolitical events that had a profound impact on the global financial landscape.The most notable events of the year included Russias invasion of Ukraine,the outbreak of a
58、 new variant of COVID-19,and the escalation of tensions between the US and China(particularly the export controls launched on semiconductors by the US on October 7,2022)1.Meanwhile,the global supply chain crisis continued to impact economies,with supply bottlenecks acce-lerating inflation worldwide.
59、These events caused a great deal of uncertainty in the markets,with the return of central bankers to the main stage and in-vestors looking for safe-haven assets.The year 2022 witnessed a slow but uneven reco-very from the pandemic,with technology and com-munication services companies registering one
60、 of their worst yearly results,while traditional sectors like energy and utilities performed better than ex-pected2.Climate change emerged as a key invest-ment theme,with an increasing focus on renewable energy and ESG investing.However,investors fa-ced challenges in both the equity and fixed-income
61、 securities markets,with the underperformance of historical averages due to increased market vola-tility and dampened investor sentiment caused by the Federal Reserves monetary tightening to curb inflation.Despite strong corporate earnings and robust economic growth,the bond markets were rocked by a
62、 series of geopolitical events and rising interest rates.The FTSE World BIG,an index that provides a broad-based measure of the fixed income markets around the world,returned-17%in dollars,while the S&P 500,a typical representation of the stock market sentiment,lost close to 20%of its va-lue in the
63、same year.1 Rodger Baker,“The Most Geopolitically Significant Events of 2022”,World-view powered by Stratford,Dec 30 2022,https:/ May 15 2023).2 Tom Lauricella,“Just How Bad Was 2022s Stock and Bond Market Perfor-mance?”,Morningstar,January 3 2023,https:/ May 15 2023).1As a result,2022 was a year ma
64、rked by geopolitical tensions,supply chain disruptions,inflation,weak stock and fixed-income returns,and mixed perfor-mance in financial markets.Investors were looking to diversify their portfolios and find safe-haven as-sets amidst the ongoing geopolitical uncertainty.Sovereign Wealth Funds(SWFs)ex
65、panded their global footprint,with Assets Under Management(AUM)rising from$10.39 trillion in 2021 to$11.6 trillion.This 11%total growth primarily stemmed from the Middle East and Eastern Asia,which saw increases of 15%and 11%,respectively.While sti-ll tiny players,South Americas SWFs boasted a near-
66、doubling of AUM,spurred by revenue from co-pper and oil price tailwinds and a low baseline.Among the largest funds,the Norwegian SWF,Go-vernment Pension Fund Global,remained the worlds biggest,boasting$1.4 trillion in AUM.Chi-nese fundsChina Investment Corporation,CIC,and the State Administration of
67、 Foreign Exchan-ge,SAFEemerged as the second and third largest,respectively,marking 13%and 27%growth.In the Middle East,the Public Investment Fund of Saudi Arabia stood out,growing by a remarkable 45%,thus solidifying its position among the top global players.On the individual fund level,the Gabones
68、e and the Peruvian SWFs recorded the highest growth in 2022,fueled by a rise in copper and oil prices and post-pandemic capital injections.Also,in South America,the Guyanese SWF,bolstered by signifi-cant oil discoveries,rose to become the largest per capita fund in Latin America.In Europe,both CO-FI
69、DES(Spain)and CDP Equity(Italy)saw a notable rise in AUM in the last 15 months due to new capital infusions.This expansion not only aims to invest in and develop local industries but also to generate global relationships with other SWFs.Ireland also announced plans to establish a multi-billion SWF,l
70、everaging a surplus forecasted to reach 65bn over 13Source:Sovereign Wealth Research-IE Center for the Governance of Change(2023)Temasek Holdings113(30.1%)GIC61(1?.2%)Mubadala59(1?.?%)Abu Dhabi Investment Authority30(?.0%)Qatar Investment Authority26(?.?%)Public Investment Fund17(?.?%)ADQ11(2.?%)Kuw
71、ait Investment Authority7(1.?%)Future Fund6(1.?%)Government Pension Fund Global6(1.?%)TOTAL DEALS376T?1?S?F?e?s336(89.4%)Others(21)40(10.6%)Figure 1T?e mos?a?i?e?o?e?eign?eal?nds?Deal count.In brac?ets,percentage of total deals.the next four years.This move comes after ultra-low tax rates attracted
72、some of the worlds largest com-panies,transforming the countrys public finances.Lastly,Ethiopias Investment Holding,created in 2021,consolidated diverse government-owned as-sets under one umbrella,managing an impressi-ve$46 billion.In the Philippines,the government began establishing its SWF,Maharli
73、ka Investment Fund,with an initial AUM of$8.9 billion.Funded by the central banks dividend and local development bank resources,this fund is expected to become a vital player despite current political controversies.POST COVID AND THE SURGE OF SWFThe geopolitical events and uncertainty in the mar-ket
74、s set the stage for a challenging year for SWFs.They navigated the turbulent waters with strategic investment decisions.Our current analysis concen-trates on direct sovereign equity investments an-nounced from January 2022 to March 2023.Only in 2022,it scrutinised 376 investments across 354 distinct
75、 transactions,with the discrepancy attri-buted to different sovereign funds participating in the same deals.While the present sample is slight-ly smaller than the previous one,it is three times greater than our 2019-2020 sample.As is typical of our sampling,discrete capital commitments or funds depl
76、oyed are generally difficult to source or estimate for every deal.Rather we report aggregate deal volumes when available.For our current sam-ple,for deals with available data,SWFs participated in 354 transactions whose aggregate transaction value was approximately$95 billion.14SOVEREIGN WEALTH FUNDS
77、 2023.INVESTING IN A DIFFERENT WORLD ORDER:SOVEREIGN WEALTH FUNDS 202314 The report uncovers patterns similar to past trends:31 SWFs were active during the period,with the top sixTemasek,GIC,Mubadala Investment Company,Abu Dhabi Investment Authority,Qatar Investment Authority,and the Public Investme
78、nt Fundcon-trolling the field.These funds represent 81%of the investment activity and approximately 93%of the volume participated by SWFs during the 2022 pe-riod.GIC stood out with participation in 61 deals,with a total value joined equal to$53 billion,or 43%of the total volume joined by all SWFs du
79、ring this period.ADIA and Temasek followed,participating in deals worth$28 billion and$12 billion,respectively.The distribution changes when considering the number of deals.Temasek and GIC,the active Singaporean funds,still lead the pack,with involvement in 113 and 61 deals,respectively.This may not
80、 last much,Source:Sovereign Wealth Research-IE Center for the Governance of Change(2023)Note:The total deal value here also includes deals involving 2 or more SWFs and that explains a higher total than unique transactions($95bn).GIC53.9(44.3%)Abu Dhabi Investment Authority27.7(22.7%)Temasek Holdings
81、12.1(9.9%)Mubadala9.3(7.?%)Qatar InvestmentAuthority6.7(?.?%)top 5 swf TOTAL DEAL VALUE109.7 US$billionFigure 2The most active Sovereign Wealth Funds in 2022Total deal value joined per SWF and percentage of total value.US$billion.15given they are closely followed in 2022 by Mubada-la,with 59 deals.A
82、DIA,Qatar Investment Authori-ty,and Saudis Public Investment Fund also showed robust activity,partaking in 30,26,and 17 deals,respectively.These top six SWFs contain 81%of the deals.It is remarkable the deal activity of Mubadala.The geographical distribution of SWF direct invest-ment retains its tra
83、ditional pattern,with the largest financial markets and economies capturing the greatest shares.The US held 58%of all global tran-sactions(valued at$55 billion),while the UK,India,Saudi Arabia,and Germany combined to claim 27%($26 billion combined).In the US,the top 3 sectors(industrials,information
84、 technology,and real esta-te)received a combined total value of$43 billion,while in the UK,the top performing sector was real estate;in India,health care;in Saudi Arabia,finan-cials;and in Germany,information technology.The Middle East region warrants specific attention.The region not only hosts the
85、 most sizable and acti-ve SWFs,but it has also attracted significant foreign direct investment(FDI)in the Post-Covid period.The UAE,Saudi Arabia,and Qatar became leading countries for FDI destinations in the post-COVID period,with the number of projects exceeding that of European counterparts,accord
86、ing to fDi Intelli-gence3.In this report,the UAE and Saudi Arabia collectively drew nearly$5 billion in investment,more than European countries or Chinas total,and Source:Sovereign Wealth Research-IE Center for the Governance of Change(2023)U.S.116(30.9%)India55(?.?%)U.K.28(?.?%)China22(?.9%)Sin?a?o
87、re15(?.0%)TOTAL DEALS376T?COUNTRIES?e?236(62.8%)Other COUNTRIES1?(37.2%)Figure 3Top 5 destination countries in 2022 by deal countDeal count.In brackets,percentage of total deals.Source:Sovereign Wealth Research-IE Center for the Governance of Change(2023)U.K.13.5%U.S.58.0%India8.2%Saudi?ra?ia2.9%Ger
88、many2.7%top 5 countries8?.?%other countries14.7%Figure 4Top 5 destination countriesin 2022 by deal volumePercentage of total deal volume.3 Alex Irwin-Hunt,“Middle East countries lead post-Covid investment rebound”,fDi Intelligence,May 10 2023,https:/ May 20 2023).16SOVEREIGN WEALTH FUNDS 2023.INVEST
89、ING IN A DIFFERENT WORLD ORDER:SOVEREIGN WEALTH FUNDS 202316Source:Sovereign Wealth Research-IE Center for the Governance of Change(2023)Canada22.0Chile 14.33China2,869.0Colombia 3.64Egypt0.63Kiribati0.7Mexico1.03BahamasPanama 1.29Peru 1.514.77 Trinidad and Tobago0.03 Tur?s?Caicos IslandsLibya68.0Ma
90、lta 2.0Morocco 2.3Mauritania 0.15Senegal 0.1LiberiaGhana 0.66Nigeria3.0S?o Tom?e Pr?ncipe N/AE?.Guinea0.16Gabon 1.89N/A South Sudan0.12 UgandaNew Zealand39.0South Korea169.02.4 VietnamFrance 2.3United KingdomJapanItaly 9.755.0 BruneiIndia4.0Spain6.0Kaza?hstan79.09Ireland 16.0Malaysia 30.01.9 Georgia
91、Romania8.9 PhilippinesCyprus N/ABangladesh6.0 IndonesiaMacau SARNauru0.16514.0 Hong Kong SAR(China)N/A Papua New GuineaMongolia0.09Koso?o23.0 Iran53.43 AzerbaijanTur?iye 19.96TaiwanNew CaledoniaTimor-Leste 17.0South Africa0.6 IsraelJordanLebanonPalestine 0.96N/A Tur?menistanAngola 3.0Namibia 0.02Ken
92、ya46.0 Ethiopia0.2 Djibouti0.24 RwandaD.R.C.0.02Oman 42.0450.0 Qatar19.62 BahrainN/A ZimbabweZambiaMozambi?ue3.9 Botswana1.87 Mauritius0.03 Venezuela1.42 GuyanaN/A SurinameTanzaniaUSA194.23UAE1,911.79Singapore 1,097.0Norway1,437.0Saudi Arabia 1,160.0Australia202.8Russia163.0773.3 Kuwait(Year of esta
93、blishment N/A)At present,the number of active sovereign wealth funds stands at 100,two more than in our 2021 Ranking.60 countries have established at least one SWF.The Middle East,China,Southeast Asia,and Norway are still the four most relevant poles for SWFs.Assets under management totaled$11.5 tri
94、llion.SWFs have widely spread in recent years,and since 2010 there have been 40 newly formed funds.Another 19 countries are actively contemplating establishing an SWF.Debates over new SWFs are growing in Africa,Central Asia and Eastern Europe.As of 2022,the total count of operating or prospective SW
95、Fs has reached 119.Of these,44 are either full or associate members of the International Forum of Sovereign Wealth Funds.Pre-2010 SWFsCountries considering SWFsNew SWFs(2010-2023)IFSW membersIFSW membersAssets under Management(US$billion)PRE-?SWF58IFSW MEMBERS26PRE-?SWF41IFSW MEMBERS22countries cons
96、i?erin?swf19Infographic 1IE Sovereign Wealth Research Ranking 202317Source:Sovereign Wealth Research-IE Center for the Governance of Change(2023)Canada22.0Chile 14.33China2,869.0Colombia 3.64Egypt0.63Kiribati0.7Mexico1.03BahamasPanama 1.29Peru 1.514.77 Trinidad and Tobago0.03 Tur?s?Caicos IslandsLib
97、ya68.0Malta 2.0Morocco 2.3Mauritania 0.15Senegal 0.1LiberiaGhana 0.66Nigeria3.0S?o Tom?e Pr?ncipe N/AE?.Guinea0.16Gabon 1.89N/A South Sudan0.12 UgandaNew Zealand39.0South Korea169.02.4 VietnamFrance 2.3United KingdomJapanItaly 9.755.0 BruneiIndia4.0Spain6.0Kaza?hstan79.09Ireland 16.0Malaysia 30.01.9
98、 GeorgiaRomania8.9 PhilippinesCyprus N/ABangladesh6.0 IndonesiaMacau SARNauru0.16514.0 Hong Kong SAR(China)N/A Papua New GuineaMongolia0.09Koso?o23.0 Iran53.43 AzerbaijanTur?iye 19.96TaiwanNew CaledoniaTimor-Leste 17.0South Africa0.6 IsraelJordanLebanonPalestine 0.96N/A Tur?menistanAngola 3.0Namibia
99、 0.02Kenya46.0 Ethiopia0.2 Djibouti0.24 RwandaD.R.C.0.02Oman 42.0450.0 Qatar19.62 BahrainN/A ZimbabweZambiaMozambi?ue3.9 Botswana1.87 Mauritius0.03 Venezuela1.42 GuyanaN/A SurinameTanzaniaUSA194.23UAE1,911.79Singapore 1,097.0Norway1,437.0Saudi Arabia 1,160.0Australia202.8Russia163.0773.3 Kuwait(Year
100、 of establishment N/A)At present,the number of active sovereign wealth funds stands at 100,two more than in our 2021 Ranking.60 countries have established at least one SWF.The Middle East,China,Southeast Asia,and Norway are still the four most relevant poles for SWFs.Assets under management totaled$
101、11.5 trillion.SWFs have widely spread in recent years,and since 2010 there have been 40 newly formed funds.Another 19 countries are actively contemplating establishing an SWF.Debates over new SWFs are growing in Africa,Central Asia and Eastern Europe.As of 2022,the total count of operating or prospe
102、ctive SWFs has reached 119.Of these,44 are either full or associate members of the International Forum of Sovereign Wealth Funds.Pre-2010 SWFsCountries considering SWFsNew SWFs(2010-2023)IFSW membersIFSW membersAssets under Management(US$billion)PRE-?SWF58IFSW MEMBERS26PRE-?SWF41IFSW MEMBERS22countr
103、ies consi?erin?swf19Infographic 1IE Sovereign Wealth Research Ranking 202318SOVEREIGN WEALTH FUNDS 2023.INVESTING IN A DIFFERENT WORLD ORDER:SOVEREIGN WEALTH FUNDS 202318played significant roles in the Green Energy Tran-sition.Other countries where SWFs deals total volume exceeded a billion dollars
104、included China,Singa-pore,Switzerland,Australia and France.These Top 10 countries accounted for 95%of the total sample value.DRIVING SECTORS OF 2022Drilling down into the specifics,SWFs demons-trated a clear preference for certain sectors.Their investment activities were particularly notable in tech
105、nology,real estate,and industrials;in addition,healthcare was the second most active in terms of the number of deals,although the average amount per transaction was not as big as the other sectors.The Covid-19 pandemic has steered FDI activity toward specific sectors such as semiconductors,re-newabl
106、e energy,electronic components,biotech,communication,and minerals.These sectors have gained increased attention due to their relevance in addressing the crisis and the subsequent recovery and also affected SWF decisions during 2022.SWF direct investment activity usually aligns with global M&A trends
107、,showing a proactive approach to medium and long-term sector growth.Indus-trials,information technology,and real estate made up approximately 66%of these investments.Each sector attracted close to$21 billion in invest-ments in 2022,accounting for 204 out of 376 total transactions.The most significan
108、t transactions in the technology sector revolved around computer software and e-commerce.Within the industrial sector,SWFs showed a preference for climate-re-lated technologies and had an increased focus on agritech,environmental engineering,and logistics.The real estate sector ranked third in inves
109、tment volume,implying higher transaction values,despi-te engaging in only 25 transactions.The healthcare sector emerged as the second busiest sector.SWFs concentrated on 56 transactions worth$9.8 billion and saw the highest number of co-investments be-tween SWFs.The two largest deals in which SWF wa
110、s invol-ved were the investment in Store Capital Corp for$13.8 billion and in Emerson Climate Technologies for$11.8 billion,both located in the US.On the Source:Sovereign Wealth Research-IE Center for the Governance of Change(2023)*Consumer Cyclical*Consumer Defensi?e3.Industrials 54(14.4%)4.Financi
111、als 46(12.2%)5.Consumer Discretionary*39(10.4%)6.Real Estate 25(?.?%)7.Energy 24(?.4%)8.Consumer Sta?les*19(?.1%)10.Materials 9(2.4%)9.Communication Ser?ices 1?(2.?%)1.In?ormation?echnology 94(2?.0%)2.Health Care 56(14.?%)Figure 5Top 10 industriesin 2022 by deal countDeal count.In brackets,percentag
112、e of total del count.top 10 industries376deals19one hand,Store Capital Corp,a rapidly expanding net-lease REIT in the US,marked one of GICs lar-gest M&A transactions in the country.On the other,Emerson Climate Technologies is a significant pla-yer in the climate technology sector,providing hea-ting
113、and air conditioning solutions.This market niche is projected to witness a compound annual growth rate(CAGR)of 24%over the next decade,and both GIC and ADIA,alongside Blackstone,par-ticipated in this deal.SOFTWARE,E-COMMERCE,AND THE CRYP-TO WAVEThe Information Technology sector accounted for 22%of t
114、he total transactions.Consistent with 2021,SWF investments in regional e-commerce leaders aligned with a long-term outlook rooted in glo-bal shifts in consumer behaviour.Three principal deals,valued together at$11.5 billion,involved computer software and e-commerce companies in the U.S.and the U.K.-
115、Zendesk,The Access Group,and C.These transactions mostly ai-med to privatise the target companies(requiring a minimum 33%premium on the final stock closing price)or to join late-stage venture rounds amid a promising investment landscape shaped by global economic recovery post-pandemic.GIC and ADIA f
116、ormed part of a consortium led by Hellman&Friedman,which took private the San Francisco-based software company Zendesk in an all-cash deal worth$10.2 billion.Following pressure from Jana Partners,a 2.5%stakeholder,to consider a sale,Zendesk accepted the deal,thus preventing a potential proxy battle
117、at the forthcoming annual meeting.The deal represented a 33%premium on the last stock closing price.GIC participated in a$1.2 billion private placement in The Access Group,a business management sof-tware provider in the UK,Ireland,and Asia Pacific.This investment formed part of a larger investment b
118、y Hg and TA Associates and will support Access Groups growth strategy and product development,particularly focusing on its SaaS platform.Finally,GIC and the Qatar Investment Authority joined other investors which collectively raised$1 billion for C in a late-stage venture round.The funding will aid
119、the payment solutions providers U.S.expansion,technological advance-Source:Sovereign Wealth Research-IE Center for the Governance of Change(2023)*Consumer Cyclical*Consumer De?ensive1.Industrials 21.3(22.3%)2.In?ormation?echnology 20.9(2?.?%)3.Real Estate 20.7(2?.?%)4.Health Care 9.8(?0.3%)5.Consume
120、r Discretionary*7.8(?.?%)6.Financials 6.4(?.?%)7.Energy 4.8(?.0%)8.Consumer Sta?les*2.2(2.3%)9.Communication Ser?ices 1.1(?.?%)10.Materials 0.3(0.3%)top 10 industries total deal volume95.2US$billionFigure 6Top 10 industries in 2022by deal volumeDeal volume in US$billion.In brackets,percentage o?tota
121、l deal volume.20SOVEREIGN WEALTH FUNDS 2023.INVESTING IN A DIFFERENT WORLD ORDER:SOVEREIGN WEALTH FUNDS 202320involved at Temasek held themselves accountable,accepted reduced compensation,and continued to uphold their charter obligation4.The tech sector witnessed an escalating interest in Artificial
122、 Intelligence(AI),with SWFs participa-ting in six deals amounting to$700 million in 2022.Among those transactions,Singapores SWF,GIC,in collaboration with Tiger Global Management and three other co-investors,committed$350 million in post-IPO equity funding for Pagaya.This company leverages its AI ne
123、twork to enable financial insti-tutions to broaden their reach to more customers.Temasek was not far behind,engaging in four deals that totalled nearly$300 million.The SWF inves-ted in SparkCognition,an innovative startup using machine learning software to streamline processes,predict future scenari
124、os,and thwart cyberattacks.Brightseed,a bioscience and AI startup;Soul Ma-chines,a New Zealand-based leader in autonomous animation;and V7,an AI engine helping manage datasets,were also recipients of Temaseks funding.Meanwhile,Mubadala participated in a modest ear-ly-stage funding round of$50 millio
125、n for Unlearn.AI,a startup integrating AI,digital twins,and sta-tistics to facilitate smaller and more efficient clini-cal trials.Interestingly,these investments came amidst a sur-ge in AI enthusiasm,a trend triggered in part by the launch of ChatGPT.According to data from CB Insights,funding in the
126、 generative AI space alone achieved a record of$299 million in 2022,with the momentum carrying into 2023 as the sector attrac-ted$155 million within the first few months.This trend underscores the significant role AI is be-ginning to play in the technology and investment landscapes5.ment,and focus o
127、n Web3.C intends to increase its U.S.presence and enhance payment solutions for online marketplaces,a sector witnes-sing increased transaction volumes due to digital shifts during the pandemic and the growth of the gig economy.Future offerings will include identi-ty verification technologies,split p
128、ayments,trea-sury-as-a-service,and existing payout capabilities.GICs active participation in this deal further illus-trates its role as one of the most relevant SWFs and its significance as a primary actor in global me-ga-deals(joining or leading deals worth more than$11 billion).This status is sust
129、ained by its formi-dable dealmaking and due diligence capabilities,in addition to the long-run partnerships it maintains with top-tier private equity firms.Cryptocurrency,blockchain,and application sof-tware trends in 2022 saw significant activity.On the one hand,application software investments rea
130、ched$2.7 billion across 19 deals.On the other,blockchain and cryptocurrency secured close to$1.7 billion across eight deals.Crypto world issues became apparent with the FTX collapse,a major cryptocurrency exchange.FTX struggled to handle withdrawal requests,tallying an estimated$6 bi-llion within th
131、ree days.This struggle led to a liqui-dity crisis;FTX could not meet these requests.In November 2022,FTX declared bankruptcy;its CEO stepped down.This event occurred shortly after Bi-nance,the top global crypto exchange,abandoned plans to purchase FTX.The bankruptcy paperwork revealed several corpor
132、ate failures,including sof-tware misuse to hide misappropriation of customer funds.As reported by Coindesk,FTXs fall in No-vember erased approximately$183 billion in digi-tal asset value.In contrast,ten months before the scandal,in January 2022,FTX had secured an extra$400 million from 12 investors.
133、Notably,Temasek and SoftBank contributed to this financing round.The Temasek case serves as a poignant reminder of the risks inherent in investing in new sectors and emerging technologies.Some new markets or emer-ging startups lack transparency and accountability,as seen with the FTX debacle.Temasek
134、 publicly expressed its disappointment over its FTX invest-ment,citing the detrimental impact of the crypto exchanges fraudulent conduct on its reputation.Despite the fallout from the FTX collapse,those 14 Sharwood Simon,“Singapores sovereign wealth fund regrets investment in crypto-villain FTX”,The
135、 Register,May 30 2023,https:/ June 22 2023).5 CB Insights,“Character.AI sees millions of installs as generative AI com-panions gain traction”,CB Insights Research,June 6 2023,https:/ June 22 2023)21THE BRICK-AND-MORTAR RESILIENCEThe bond and equity markets struggled in 2022.Ac-cording to Morningstar
136、,in 2022,the largest bond funds experienced their worst decline in the 23-year history of the benchmark.During that period,those funds lost close to 15%of their value.Simi-larly,the equity market benchmarks registered one of the worst years of performance.The Morningstar US Market Index lost 19.4%in
137、 2022,and technology stocks,measured by the US Technology Index,de-clined 31.5%6.Given its low correlation with the broad market,SWFs significantly focused on the real estate sec-tor,directing 21%of the total SWF deal activity to it.Real estate attracted 25 transactions,amounting to$20.7 billion.Rea
138、l Estate Investment Trusts(RE-ITs)and portfolios featuring office properties,gues-trooms,and student housing complexes comprised the targeted assets.GIC,a traditional leader in real estate,emerged as the most active SWF in this sec-tor,participating in multiple large-scale deals.One such transaction
139、 involved the Student Roost,the UKs third-largest student accommodation plat-form,capitalising on the post-COVID resurgence in student housing demand.The acquisition,valued at$4 billion,incorporated a portfolio of over 23,000 beds and a development pipeline guaranteeing 3,000 additional beds in key
140、UK university cities.Yet,the hallmark transaction of 2022 was GICs ac-quisition,in partnership with Oak Street,of Store Capital Corp,a rapidly expanding net-lease REIT in the US.This transaction,valued at$13.8 billion,ranks among GICs largest M&A transactions in the US,according to Lee Kok Sun,GICs
141、CIO of real es-tate.SUSTAINABLE INDUSTRIAL SURGEThe industrial sector drew substantial activity,particularly in sustainable trends such as agritech,climate technologies,and logistics.In 2022,SWFs participated in 54 transactions worth$21 billion in this sector.Not surprisingly,now,GIC led invest-ment
142、 activity in this sector,participating in 80%of the transactions,and again,two of the most signifi-cant transactions in the sector involved GIC.By Oc-tobers end,GIC,along with Blackstone and ADIA,announced an$11.7 billion investment in Emerson Climate Technologies,now rebranded as Copeland.This comp
143、any,a key player in climate technology,supplies heating and air conditioning products and services across industrial,commercial,and residen-tial markets.Future Market Insights(FMI)predicts a 24.2%compounded annual growth rate(CAGR)for the climate technology market between 2022-20327,spurred by new p
144、ollution monitoring tech-nologies.GIC,ADIA,and Blackstones investment strategy capitalise on the anticipated rapid growth of energy-efficient heating and cooling equipment within consumer and business carbon-reduction initiatives.Another significant investment was GICs$3.6 bi-llion acquisition of Di
145、rect ChassisLink,a US chassis provider.GIC executed this transaction in partner-ship with OMERS Infrastructure and Wren House,a Kuwait Investment Authority subsidiary.Direct ChassisLink boasts a fleet of over 151,000 marines and 1,000,000 domestic chassis.Both GIC and KIAs investment strategy reflec
146、ts an intent to capita-lise on the rising trend of intermodal transporta-tion,which companies increasingly adopt to reduce transport costs and carbon footprint.Finally,the agritech and agricultural operations sectors also drew significant SWF investments.The-se sectors participated in nine deals tot
147、alling nearly$600 million.Temasek figured prominently in se-ven of these transactions,investing in firms such as Wildtype(a cell-based sushi-grade salmon pro-ducer),EFishery(an aquaculture tech startup that provides feeding devices,software and financing for fish and shrimp farmers),and Agriconomie(
148、an agri-cultural supplier and e-commerce platform).ADIA also made a substantial$194 million investment,along with TPG,in UPL Sustainable Agri Solutions,one of Indias leading agtech platforms.6 Tom Lauricella,“Just How Bad Was 2022s Stock and Bond Market Perfor-mance?”,Morningstar,January 3 2023,http
149、s:/ May 15 2023).7 Future Market Insights,“Climate Tech Market Outlook(2022-2032)”,FMI,August 2022,https:/ May 20 2022).22SOVEREIGN WEALTH FUNDS 2023.INVESTING IN A DIFFERENT WORLD ORDER:SOVEREIGN WEALTH FUNDS 202322HEALTHCARE:AS BUSY AS TECH After technology,the healthcare sector emerged as one of
150、the busiest sectors in 2022.It saw 56 tran-sactions amounting to$9.8 billion.The US,the UK,and India were the main recipients,attracting in-vestments worth$3.5 billion,$2.7 billion,and$1.6 billion,respectively,which represented 80%of the sectors investment.Mubadala partnered with War-burg Pincus to
151、acquire Pharma Intelligence,a com-pany that provides specialist intelligence,data,and software for clinical trials,drug development,and regulatory compliance.The acquisition rationale Source:Sovereign Wealth Research-IE Center for the Governance of Change(2023)Mubadala11(22.4%)Temasek Holdings8(?.3%
152、)GIC7(?4.3%)Abu Dhabi Investment Authority7(?4.3%)Public Investment Fund5(?0.2%)Qatar Investment Authority3(?.?%)Investment Corporation of Dubai2(4.?%)China Investment Corporation1(2.0%)Dubai Holding1(2.0%)Government Pension Fund Global1(2.0%)TOTA?D?A?S49T?SWF4?(93.9%)Other SWF3(?.1%)Figure 7The mos
153、t active SovereignWealth Funds in 2023Deal count.In brackets,percentage of total deals.Source:Sovereign Wealth Research-IE Center for the Governance of Change(2023)U.S.63.2%China13.9%India6.9%Saudi?ra?ia5.7%Sou?h?orea4.2%TOP 5 COUNTRIES93.9%other countries6.1%Figure 9Top 5 destination countriesin 20
154、23 by deal volumePercentage of total deal volume.posits that demand for the companys services will increase in an increasingly data-driven world that relies on predictive analytics for health issue reso-lution.In India,GIC joined a syndicate of investors to acquire KKRs equity share of Max Healthcar
155、e Institute,a deal valued at$1.1 billion.Max Heal-thcare Institute operates 17 facilities across major Indian cities,providing more than 3,400 beds.Q1 2023:MEGA DEALS AND THE RETURN OF FINANCE The opening quarter of 2023 recorded 49 transac-tions with a combined value of$23 billion.Muba-dala was the
156、 most active fund with 11 deals,while Temasek,GIC,and ADIA took part in more substan-tial transactions totalling$10 billion,$8.6 billion,and$5.6 billion,respectively.Despite the number of deals,77%of the total investment was concen-trated in just five transactions.These significant transactions acco
157、unted for$17 billion and inclu-ded Stripes$6.5 billion fundraising,Cvent Hol-dings$4.6 billion private acquisition with ADIAs involvement,and a$3.1 billion investment in Co-fco Fortune led by Temasek and China Investment Corporation.Mubadala also invested with Stone 23Point Capital nearly$2 billion
158、in Truist Insurance Holdings,the sixth-largest insurance broker in the US,and the Public Investment Fund of Saudi Arabia invested$1.3 billion in four construction firms.The US remained the most attractive destination for SWF investments and took 63%of the total va-lue with SWFs participation.However
159、,China came in second due to the$3.1 billion COFCO deal.India and Saudi Arabia also drew significant investments,receiving deals worth$1.5 billion and$1.3 billion,respectively.In India,ADIA spearheaded two signi-ficant deals involving stake acquisitions in Greenko Group,a biotech firm,and Lenskart,a
160、n eyewear re-tailer.Conversely,Saudi Arabias Public Investment Fund invested$1.3 billion in four local construction firms through a single deal.In a substantial transaction worth around$4.6 bi-llion,ADIA teamed up with a Blackstone affiliate to privatise Cvent Holding Corp.Cvent,a technology solutio
161、ns provider for the meetings,events,and hospitality sector,suffered financially due to wi-despread event cancellations during the COVID-19 pandemic.However,with an anticipated global eco-nomic recovery on the horizon,particularly in the Figure 8The most active Sovereign Wealth Funds in 2023Total dea
162、l value joined per SWF and percentage of total value.US$billion.Source:Sovereign Wealth Research-IE Center for the Governance of Change(2023)Note:The total deal value here also includes deals involving 2 or more SWFs and that explains a higher total than unique transactions($95bn).Temase?oldings10.2
163、(28.5%)Abu DhabiInvestment Authority5.7(?5.?%)GIC8.6(2?.8%)Mubadala2.6(?.?%)China Investment Corporation3.1(8.?%)TOTAL DEAL VALUE30.2 US$billion24SOVEREIGN WEALTH FUNDS 2023.INVESTING IN A DIFFERENT WORLD ORDER:SOVEREIGN WEALTH FUNDS 202324On a general note,the mega deals in 2023,like Stri-pes$6.5 b
164、illion investment and Microsofts$10 billion investment in OpenAI,contrast with the significant slowdown in global venture capital(VC)funding.According to Crunchbase News,2022 and the first quarter of 2023 witnessed a significant de-celeration in activity across all stages of global VC funding,with e
165、ach funding stage marking a 44%to 54%decline in a year-over-year analysis.Glo-bal funding in 1Q23 merely reached$76 billion,reflecting a steep 53%drop compared to the pre-vious year.This slowdown in VC activity has been linked to an array of factors,including shifting glo-bal geopolitics,rising inte
166、rest rates,and increased market volatility.The situation was further exacer-bated in 2023 with the collapse of the Silicon Valley Bank,an event that dealt a significant blow to the VC industry8.FROM CRISIS TO COMEBACK:SWF POST-PANDEMIC INSIGHTSExamining data from two 15-month periods pro-vides insig
167、ht into SWF behaviour.The first,from October 2020 to December 2021,is called the pan-demic period9.The second,from January 2022 to March 2023,is called the recovery period.This analysis sets the end of the pandemic in December 2021 for simplicity and comparison reasons.SWFs participated in 425 deals
168、 during the recovery period and 448 during the pandemic period.The leading five funds-Temasek,Mubadala,GIC,ADIA,and QIA-remain steady across both periods.They engage in at least 77%of all SWF deals,325 in the recovery period and 381 in the pandemic period.A notable shift in the Top 10 ranking is the
169、 dimini-shed involvement of the Russian Direct Investment Fund,from 14 deals in the pandemic period to four in the recovery period,primarily in Russia,likely due to the Russian-Ukrainian conflict and Western sanctions.entertainment sector,Blackstone and ADIA found a promising investment opportunity.
170、Following the deal,Cvent will operate as a privately-held com-pany.The financial sector rose to prominence,largely due to the Stripe and Truist Insurance Holdings tran-sactions.GIC and Temasek were part of Stripes$6.5 billion fundraising initiative,primarily aimed at providing liquidity for current
171、and former emplo-yees and fulfilling tax obligations related to equity awards.Meanwhile,Mubadala joined forces with private equity firm Stone Point Capital to purchase a 20%stake in Truist Insurance Holding,the six-th-largest insurance broker in the US.Source:Sovereign Wealth Research-IE Center for
172、the Governance of Change(2023)*Consumer Cyclical*Consumer?efensive1.Financials 8.52.Information Technology 4.83.Consumer Staples*3.14.In?ustrials 2.15.Health Care 1.36.Communication Ser?ices 1.17.Consumer Discretionary*1.08.Real Estate 0.69.Energy 0.410.Materials 0.02top 10 industries Total DEAL vol
173、ume22.?US$billionFigure 10Top 10 industries in 2023Total deal value joined by SWFs by industry.US$billion.8 Gen Teare,“Global VC Funding Falls Dramatically Across All Stages In Roc-ky Q1,Despite Massive OpenAI And Stripe Deals”,Crunchbase News,April 5 2023,https:/ June 21 2023)9 Data for this pandem
174、ic period comes from the collaboration with the SWF Database of the SovereigNET,an initiative at The Fletcher School,Tufts University.25In terms of geographic investment destinations,the US,India,and China hold their top spots.Total value of investments in these countries ranged be-tween$14 billion
175、and$27 billion during the pande-mic.And in the recovery period,the UK,UK,India,China,and Saudi Arabia saw investment value be-tween$4 billion and$13 billion.Meanwhile,in the recovery period,the US received a staggering$70 billion with SWF participation,making up 59%of all deals.The number of deals i
176、n the US remained consistent across both periods,but the average investment per deal rose significantly in the recovery period.Ten deals alone amounted to$54 billion.Sectors that saw the most funding in the US were the industrial,tech,real estate,and fi-nancial.Just like the US,the deal count in the
177、 UK stayed steady over both periods,but the average invest-Source:Sovereign Wealth Research-IE Center for the Governance of Change(2023)&SovereigNET-Fletcher Schoolat Tufts University(2022)Temasek Holdings125(27.9%)GIC117(2?.?%)Mubadala82(?.2%)Qatar Investment Authority33(7.?%)Abu Dhabi Investment A
178、uthority24(?.?%)Russian Direct Investment Fund14(3.?%)Public Investment Fund11(2.?%)China Investment Corporation10(2.2%)ADQ6(?.3%)NIIF5(?.?%)TOTAL DEAL COUNT448TOP?SWF427(95.3%)other SWF21(4.7%)Oct 2020 Dec 2021Pandemic periodTemasek Holdings121(2?.?%)Mubadala70(?.?%)GIC68(?.0%)Abu Dhabi Investment
179、Authority37(?.9%)Abu Dhabi Investment Authority29(?.?%)Public Investment Fund22(?.2%)ADQ11(2.?%)Government Pension Fund Global7(?.?%)Kuwait Investment Authority7(?.?%)Future Fund7(?.?%)TOTAL DEAL COUNT425TOP?SWF379(89.1%)other SWF46(10.9%)Jan 2022 Mar 2023Post-pandemic periodFigure 11The most active
180、 Sovereign Wealth Funds(analysis on 15 months periods)Deal count.In brackets,percentage o?total deals.26SOVEREIGN WEALTH FUNDS 2023.INVESTING IN A DIFFERENT WORLD ORDER:SOVEREIGN WEALTH FUNDS 202326ment per deal shot up during recovery.Conversely,India,China,Germany,and Singapore,despite re-maining
181、in the Top 10 most active SWF investment recipients post-pandemic,saw a marked decrease in average deal investment.Specifically,investments dropped by 50%in India,60%in China,15%in Ger-many,and a hefty 70%in Singapore.The latest report changed the sector allocation methodology to the Global Industry
182、 Classification Standard(GIC methodology),affecting compara-bility.Nevertheless,a couple of useful insights can still be derived.In the recovery period,investments were dispersed more evenly among the top five sectors:tech,in-dustrials,real estate,financial,and healthcare.Each received investment wi
183、th total values between$11 billion and$25 billion,a stark contrast to its former period.In the pandemic phase,tech alone amassed 42%of all deals or 35%of investment dollars,tota-lling nearly$42 billion.It was followed by infras-tructure,utilities,services,and life sciences,which jointly received$57
184、billion.Healthcare,also known as life sciences in previous reports,held a steady fifth place,with close to$11 billion in investments with SWF participation in both periods.Source:Sovereign Wealth Research-IE Center for the Governance of Change(2023)&SovereigNET-Fletcher Schoolat Tufts University(202
185、2)top 10 industries Total DEAL volume69.6US$billion*Consumer Cyclical*Consumer?efensive10.Materials 0.029.Communication Services 0.28.Consumer Sta?les?0.97.Consumer Discretionary?3.06.Energy 3.65.Health Care 4.14.Financials 10.23.Real Estate 14.?2.InformationTechnolgy16.61.Industrials 16.7Figure 12D
186、estination of SWF Investments in the US(2022-2023)Total deal volume per sector.US$billion.27Source:Sovereign Wealth Research-IE Center for the Governance of Change(2023)&SovereigNET-Fletcher Schoolat Tufts University(2022)Pandemic periodOct 2020 Dec 2021TOTAL DEAL COUNT448TO?COUNT?IES294(65.6%)other
187、S154(34.4%)U.S.129(28.8%)India66(?.?%)China47(?0.?%)U.K.32(?.?%)Sin?a?ore20(?.?%)Post?pandemic periodJan 2022 Mar 2023TOTAL DEAL COUNT425TO?COUNT?IES270(63.4%)otherS155(36.6%)U.S.1?(32.2%)India63(?.8%)U.K.29(?.8%)China26(?.?%)Sin?a?ore15(3.?%)By deal count.In brackets,percentage of total deal count.
188、Figure 13Top 5 destination countries(analysis on 15 months periods)U.S.59.0%U.K.10.9%India7.9%China4.6%Saudi Arabia3.4%Post?pandemic periodJan 2022 Mar 2023TO?COUNT?IES85.8%other countries14.2%Pandemic periodOct 2020 Dec 2021TO?COUNT?IES65.4%other countries34.6%U.S.22.5%India15.6%China11.4%Saudi Ara
189、bia10.3%Sin?a?ore5.6%By deal volume.In brackets,percentage of total deal volume.28SOVEREIGN WEALTH FUNDS 2023.INVESTING IN A DIFFERENT WORLD ORDER:SOVEREIGN WEALTH FUNDS 202328Figure 14Top 10 sectors(analysis on 15 months periods)By deal count.In brackets,percentage of total deal count.Source:Sovere
190、ign Wealth Research-IE Center for the Governance of Change(2023)&SovereigNET-Fletcher Schoolat Tufts University(2022)Pandemic periodOct 2020 Dec 20211.Technology1?0(42.4%)2.Life Sciences83(?.?%)3.Services56(?2.?%)4.Industrials31(?.?%)5.Utilities27(?.0%)6.Infrastructure20(4.?%)7.Real Estate19(4.2%)8.
191、Financials17(3.?%)9.Agribusiness10(2.2%)10.Natural Resources/Commodities3(0.7%)1.Information Technology102(23.?%)2.Health Care67(?.7%)3.Industrials59(?3.?%)4.Financials51(?2.0%)5.Consumer Discretionary*47(?.0%)6.Energy27(?.3%)7.Real Estate27(?.3%)8.Consumer Staples*21(4.?%)9.Communication Services14
192、(3.?%)10.Materials10(2.3%)Post-pandemic periodJan 2022 Mar 2023*Consumer Cyclical*Consumer DefensiveTOTAL DEAL COUNT448TOTAL DEAL COUNT42529Source:Sovereign Wealth Research-IE Center for the Governance of Change(2023)&SovereigNET-Fletcher Schoolat Tufts University(2022)Post-pandemic periodJan 2022 M
193、ar 2023TOTAl DEAL VOLUME118.1US$billion1.Information Technology25.7(21.3%)2.Industrials23.3(1?.?%)3.Real Estate21.417.7%)4.Financials14.8(12.3%)5.Health Care11.1(?.2%)6.Consumer Discretionary*8.77.2%)7.Consumer Staples*5.3(?.?%)8.Energy5.1(?.3%)9.Communication Services2.2(?.0%)10.Materials0.3(0.3%)P
194、andemic periodOct 2020 Dec 2021TOTAl DEAL VOLUME120.3US$billion1.Technology42.0(3?.?%)2.Infrastructure18.8(15.6%)3.Utilities14.2(11.8%)4.Services13.2(11.0%)5.Life Sciences11.0(?.1%)6.Real Estate7.8(6.5%)7.Financials5.1(?.2%)8.Industrials4.2(5.3%)9.Natural Resources/Commodities2.8(2.?%)10.Agribusines
195、s1.2(1.0%)Figure 15Top 10 sectors(analysis on 15 months periods)By deal volume.In brackets,percentage of total deal volume.US$billion.*Consumer Cyclical*Consumer Defensive30SOVEREIGN WEALTH FUNDS 2023.INVESTING IN A DIFFERENT WORLD ORDER:SOVEREIGN WEALTH FUNDS 202330sector allocation saw a shift fro
196、m a dominant focus on Tech during the pandemic period to a more even distribution across tech,industrials,real estate,fi-nancial,and healthcare during the recovery period.The performance of these individual SWFs under-scores the resilience and strategic importance of these funds in the global financ
197、ial landscape.As we look ahead,its clear that SWFs will continue to play a crucial role in global investment as key partners for private equity firms and venture capitalists;and as a promoter of investments in key tech firms or sustainability-related technologies.In conclusion,2022 and the first qua
198、rter of 2023 re-presents a challenging period for all long-term in-vestors,including sovereign wealth funds.Geopoli-tical tensions,supply chain disruptions,the central banks fight against inflation and the market volati-lity that comes with all of them frame the complex scenarios that the new world
199、order,solidified after the Ukraine invasion,presents.SWFs demonstrated resilience and adaptability,diversifying their port-folios and focusing on sectors like technology,real estate,industrials,and healthcare,arguably sec-tors with exposure for medium and long-term suc-cess.The performance of SWFs s
200、uch as GIC,ADIA,and Temasek highlights the strategic importance of these funds in the global financial landscape.Looking ahead,SWFs will likely continue to play a crucial role in global investment,with a focus on sustainable and tech-driven sectors.The ongoing geopolitical and economic uncertainties
201、 undersco-re the need for SWFs to remain agile and adaptable in their investment strategiesTHE BIGGER PICTURESovereign Wealth Funds(SWFs)navigated a cha-llenging financial landscape in 2022 marked by geopolitical tensions,supply chain disruptions,and inflation.Amidst this uncertainty,SWFs made strat
202、egic investment decisions,with 31 active SWFs making 377 investments across 355 distinct tran-sactions,with a total value of$97.7 billion.The top six SWFsTemasek,GIC,Mubadala,Abu Dhabi In-vestment Authority,Qatar Investment Authority,and Public Investment Funddominated the field,accounting for 81%of
203、 the investment activity and approximately 93%of the capital invested during the period.The US attracted the majority of SWF investments,holding 58%of all global transactions(with total value of$55 billion).The UK,India,Saudi Arabia,and Germany combined claimed 27%($26 billion combined).The Middle E
204、ast also attracted signifi-cant foreign direct investment(FDI)in the post-Co-vid period,with the UAE,Saudi Arabia,and Qatar becoming leading countries for FDI.SWFs showed a clear preference for certain sectors,with notable investment activities in technology,real estate,and industrials.The healthcar
205、e sector also saw significant activity.The two largest deals involved the investment in Store Capital Corp for$13.8 billion and in Emerson Climate Technologies for$11.8 billion,both located in the US.Analysis of SWFs behaviour during two 15-month periods,the pandemic period(October 2020 to De-cember
206、 2021)and the recovery period(January 2022 to March 2023),reveals consistent participation by leading funds-Temasek,Mubadala,GIC,ADIA,and QIA.The US remained the top investment destina-tion,receiving transactions with SWF participation worth$70 billion during the recovery period.The Javier Capap(PhD
207、),Director,Sovereign wealth research,IE Center for the governance of change Rodrigo Arce(Mba),Associate Director,Sovereign wealth research,IE center for the governance of change 2GROWTH AND GREEN:SOVEREIGN WEALTH FUNDS ENGAGE INTO SUSTAINABILITY 3232SOVEREIGN WEALTH FUNDS 2023.GROWTH AND GREEN:SOVER
208、EIGN WEALTH FUNDS ENGAGE INTO SUSTAINABILITY 322.Growth and Green:Sovereign Wealth Funds Engage into SustainabilityINTRODUCTIONSovereign Wealth Funds(SWFs)stand at the fo-refront of a shift in global energy dynamics,with renewable energy sources and related technologies taking precedence over tradit
209、ional fossil fuels.This chapter delves into the instrumental role SWFs play in this transition,focusing on their investment stra-tegies,the sectors they target,and the impact they have on the green economy.The first part of the chapter explores the continued shift of SWFs from conventional oil-relat
210、ed indus-tries to green technologies.Although the largest and most influential funds source a substantial portion of their capital from hydrocarbon sales,they are now channelling capital into renewables.This development is evident in the data from January 2022 to March 2023,where all investments in
211、the energy sector were associated with renewables,with no investments linked to oil and gas.This repre-sents a turning point for SWFs which traditionally backed oil-related deals.The second part of the chapter discusses the role of SWFs in the energy transition,with a particular focus on energy netw
212、orks and energy storage.It hi-ghlights the significant investments made by SWFs like ADIA,New Zealand Superannuation Fund,and Mubadala in these areas.The essay also explores the diversification of sustainability investments by SWFs,with significant allocations to electric vehicle companies,sustainab
213、ility businesses,and the agri-tech sector.The final part examines the influence of SWFs be-yond the energy sector.It discusses the One Planet SWFs(OPSWF)initiative,which promotes the inte-gration of climate-related financial risks into asset management.The essay also highlights the subs-tantial prog
214、ress made by OPSWF members in recent years,including the establishment of an inaugural internal ESG Report by KIA in 2021 and a pledge by The Sovereign Wealth Fund of Egypt(TSFE)to invest$40 billion in green hydrogen projects.A LONG TERM SHIFTForeign Direct Investment(FDI)stands as a key measure of
215、investor sentiment,providing valuable insight into enduring economic and geopolitical patterns.The interpretation of FDI figures brings to light a profound shift in energy dynamics,where renewable energy sources and related technologies take precedence,leaving behind the appeal of tradi-tional fossi
216、l fuels.Data and scrutiny by fDi Intelligence establish that FDI flows towards renewable energy sectors demonstrate sustained growth over the past ten years.This culminated in a year of record-brea-king performance in 2019,followed by consistent resilience amid the turbulences brought on by the Covi
217、d-19 pandemic.As per this data,2019 marked a significant turning point:FDI influx into renewables hit an all-time high at$116.6 billion,outperforming fossil fuels for the first time,which attracted$115.5 billion during the same period.While the pandemic left its mark,FDI into renewables demonstrated
218、 resilience,totalling$96.7 billion in 2020 and$90.8 billion in 2021.Even though these numbers did not reach the 2019 peak,they surpassed the 2010s ave-rage yearly investment of$66.6 billion.Conversely,foreign investments in coal,oil,and gas fell dras-tically,tumbling down to$47.5 billion in 2020 and
219、 hitting a new record low of$16.2 billion in 2021.133FROM OIL TO GREEN TECH:THE PARADOXI-CAL SHIFT OF SWFSSovereign Wealth Funds(SWFs)find themselves amidst these evolving sustainability trends and are playing an instrumental role in the transition towards sustainability.On the one side,they are min
220、imizing their invest-ments in conventional oil-related industries and channelling capital into green technologies.This development might seem paradoxical considering that the largest and most influential funds source a substantial portion of their capital from hydro-carbon sales.From January 2022 to
221、 March 2023,all investments in the energy sector were associated with renewables,with no investments linked to oil and gas.Analysis of the Sovereign Wealth Research at the IE Center for the Governance of Change also shows that the influx of capital into this sector denoted intensified competition fo
222、r the same projects,which also implies that SWFs must exhibit increased selectivity due to a narrowing pool of investment options.Analyzing capital investments in greenfield FDI projects reveal notable changes.In 2005,global greenfield FDI allocated less than 2%to climate-re-lated and environmental
223、initiatives.By 2018,this fi-gure had expanded appreciably,contributing to 12%of global FDI.Fast forward to 2022,and climate FDI constituted 39.4%of all global capital investment in greenfield FDI projects,with total investment approaching$500 billion1.To stay competitive amid the pressure of dimini-
224、shing returns due to the inflow of fresh capital into the sector,SWFs have rethought their investment strategies.The focus has expanded from merely investing in energy generation resources like solar,wind,or hydrogen.SWFs have broadened their investment spectrum to include energy networks,energy sto
225、rage,and manufacturing supply chains.In 2022 and 1Q23,SWFs were part of 24 deals amoun-ting to$6.2 billion.This recalibration required a wider perspective to assess sustainability trends,moving beyond tradi-tional energy generation and distribution.A wider lens now encompasses sectors like electric
226、vehicles,agriculture,sustainability,and recycling.In this expanded scope,SWFs participated in 41 deals tota-lling$9.3 billion,which included$2 billion in deals in electric vehicle companies and an additional$1.1 billion in sustainability,agritech,and agricultural operations.On the other side,a compr
227、ehensive sustainable portfolio may not strictly align with a selection of sectors but instead may relate to general policies within portfolios and boardrooms.This approach can aid in reducing the carbon footprint of“hea-vy-emitting industries”such as real estate,trans-portation,waste management,land
228、 use,cement,Fossil fuilsRiniwablis2005125820101?545201511?762004796202?1791Source:Sovereign Wealth Research-IE Center for the Governance of Change(2023)based on fDi Intelligence(2022)Figuri 1The SwitchAnnouncid griinfild FFD iiriniwablis and fossil fuils,in US$billion.1 Henry Loewendahl,“
229、Global competition for climate heads up”,May 24 2023,fDi Intelligence,https:/ May 28 2023)3434SOVEREIGN WEALTH FUNDS 2023.GROWTH AND GREEN:SOVEREIGN WEALTH FUNDS ENGAGE INTO SUSTAINABILITY 34and chemicals.Therefore,SWFs have adjusted in-vestment strategies and exerted boardroom influen-ce to advocat
230、e for sustainability.This dual strategy underscores their proactive role in guiding a future with higher regard for environmental consciousness and sustainability.Source:Sovereign Wealth Research-IE Center for the Governance of Change(2023)Figure 2SWF Investments in the Low Carbon TransitionDeal cou
231、nt and total deal value per year.US$billion.TotalUS$billion6.41.71.61.20.90.80.124187431Deals20231.5N/A0.80.60.07N/AN/AUS$billion5N/A221N/AN/ADeals20224.81.70.80.60.80.80.1US$billion1?165331DealsGas-DistributionRenewable EnergyEnergy-Alternate SourcesEnergyEnergy StorageSolarEnergy1.?1.9550.40.4111.
232、51.544*(Consumer Cyclical)Electric?ehicleConsumer Discretionary*1.10.50.30.311254N/AN/AN/AN/AN/AN/AN/AN/A1.10.50.30.311254SustainabilityAgTechAgricultural?erationsIndustrials0.020.02110.020.0211N/AN/AN/AN/AForestryMaterials9.28411.8577.4434Grand totalWIRING THE FUTURE:SWFS AND THE REIN-VENTION OF EN
233、ERGY NETWORKS The participation of SWF in the transition towards renewable energy has seen two major trends over the past 15 months.Primarily,the significance of energy networks has become evident,and ADIA,NZSF,and Mubadala have had key participation in this market.35 A case in point is the largest
234、deal of the period:a$1.7 billion acquisition of a 10%stake in the Ameri-can company Sempra Infrastructure,in which ADIA participated.Sempra operates 4,500 miles of natural gas transportation pipelines and aims to develop 3,000 MW of solar,wind,and battery storage pro-jects.The investment into Sempra
235、 demonstrates the emphasis on the modernization of energy networks,a necessity for a successful energy transition.Exis-ting gas infrastructure could potentially transport hydrogen once it becomes commercially viable.Re-ported global investments in green hydrogen grew from$3.3 billion in 2019,to$8 bi
236、llion in 2020,and$25.2 billion in 20212.Longroad Energy,an American developer of a 15 GW wind,solar,and storage portfolio across 13 states,also draws interest in the US pipeline infras-tructure.The NZSF,an investor in Longroad since 2016,participated in a recent$500 million equity infusion.The capit
237、al will shift the companys initial“develop to sell”business model towards ownership and expedite the expansion of its current 1.5 GW portfolio of owned assets to 8.5 GW of wind,solar,and storage projects over the next five years,accor-ding to the company press release.Finally,Mubadala,together with
238、BlackRock,in-vested close to$500 million for a 10%stake in the Indian company Tata Power Renewable Energy.In a press release last April,Tata mentioned that the investment will allow it to create Indias most comprehensive renewable energy platform,inclu-ding solar,wind and hybrid generation,and a pla
239、n to go from producing 4.9 GW of power to 20 WG in 5 years3.The heightened competition for renewable projects might have compelled Norways SWF to adapt its“conservative”policy of investing exclusively in listed assets.In January 2023,Norges Bank Invest-ment Management,the unit of the central bank ma
240、naging the gigantic Government Pension Fund Global,declared its intention to spend$650 million to procure a 49%share in a portfolio of solar plants and onshore wind farms in Spain,with a combined capacity of nearly 1.3 gigawatts.This would be the 12 fDi Intelligence,Green Hydrogens Moment in the Sun
241、,2022,The Switch Report,Chapter 5,page 37.3 Ivan Shumkov,“BlackRock,Mubadala close 1st-tranche investment in Tata Power Renewables”,August 19 2022,Renewables Now,https:/renewables- May 3 2023)Source:Sovereign Wealth Research-IE Center for the Governance of Change(2023)Figure 3SWF Investments in the
242、Energy SectorDeal count and total deal value per year.US$billion.1.4754.781?6.2524Grand totalGas-DistributionRenewable EnergyEnergy-Alternate SourcesEnergyEnergy StorageSolar2023N/A0.80.60.07N/AN/AUS$billionN/A221N/AN/ADeal?20221.70.80.60.80.80.1US$billion165331Deal?TotalUS$billion1.71.61.20.?0.80.1
243、187431Deal?Energy3636SOVEREIGN WEALTH FUNDS 2023.GROWTH AND GREEN:SOVEREIGN WEALTH FUNDS ENGAGE INTO SUSTAINABILITY 36second transaction in the new unlisted category for the Norwegian SWF after it acquired a 50%interest in the Borssele 1&2 offshore wind farm located in the Netherlands.The Spanish po
244、rtfolio,some of which include greenfield projects,is operated and co-owned by renewable energy firm Iberdrola.Of the total capacity,20%will originate from wind and 80%from solar.The portfolio includes 12 projects,9 of which are slated for completion between 2023 and 2025.This renewable energy portfo
245、lio will have the capacity to meet the equivalent electricity de-mands of more than 700,000 homes each year.Only two months later,NBIM announced a consor-tium deal with Allianz Capital Partners,the German and European pension fund leader,and AIP Mana-gement,a Danish direct infrastructure investment
246、platform for institutional investors.The group is acquiring a 49.9%interest in the He Dreiht wind farm project in Germany,valued at approximately 2.6 billion.NBIM is paying approximately 430 million for its 16.6%ownership interest.He Dreiht is expected to be operational by the end of 2025 and will t
247、hen be the largest offshore wind project in Germany.Overall,the wind farm will produce clean energy equivalent to the electricity demand of 1.1 million German households.STORING THE FUTURE:SWFS AND THE RISE OF ENERGY STORAGE INVESTMENTSEnergy storage forms the second noticeable trend.With the need t
248、o balance the intermittencies of solar and wind energy(their production does not always align with demand),energy storage beco-mes integral to the sustainable energy era.FDI announcements for EV battery manufacturing have grown from a yearly average of less than$2 billion between 2010 and 2017,to an
249、 average of$14 billion a year between 2018 and 20214.Wood Mackenzie predicts the capacity of global energy storage will rise from less than 100 GW in 2022 to 741 GW in 2031,representing a 31%compound annual growth rate during this period5.Amid this trend,Temasek took part in$1.1 billion in investmen
250、ts across 8 deals,five of which took place in North America.The largest transaction involved a$450 million Series E funding round for Form Energy,an American firm working on a new class of multi-day storage systems.Other participants in this deal included Canada Pension Plan Investment Board and GIC
251、.Temasek also participated in a$300 million fundraising by Our Next Energy,another American energy storage company that aims to double the range of batteries for electric cars.Further investment in the energy storage sector includes$214 million in funding for Group 14 Technologies,with participation
252、 from the Oman In-vestment Fund.The company seeks to develop new silicon-carbon composite materials for lithium-ion markets,aiming to enable the electrification of a range of devices and modes of transportation.Group 14s composite materials and industrial production process intend to overcome cost,s
253、cale,and performance challenges that have impeded the worlds transition towards an all-electric future.THE GREEN SPECTRUM:THE DIVERSIFICA-TION OF SUSTAINABILITY INVESTMENTSThe influence of SWFs extends beyond just the energy sector,enveloping other segments of the green economy such as Electric Vehi
254、cle companies.In this area,SWFs joined in five different deals,worth$1.9 billion.The PIF and Temasek made sig-nificant investments in American firms:the former acquired$915 million worth of stocks in Lucid Motor,a manufacturer of luxury,highly efficient electric vehicles,while the latter participate
255、d in a$275 million post-IPO funding round for Solid Ener-gy Systems,a company producing rechargeable cells tailored for aerospace markets.The other part of those$1.9 billion was directed towards Switzerland,Taiwan,and India,countries that also witnessed substantial investment inflows nearing$710 mil
256、lion from SWFs.Notable instan-ces include GIC and Temaseks investments in ABB E-Mobility,Gogoro,and Euler Motors.These companies specialize in diverse aspects of the green transportation sector,ranging from EV-charging solutions to battery solutions for intra-city trans-portation.4 fDi Intelligence,
257、The Rise of the Battery Supply Chain,2022,The Switch Report,Chapter 4,page 305 Wood Mackenzie,Global energy storage capacity to grow at CAGR of 31%to 2030,Wood Mackenzie,September 30 2020,https:/ April 25 2023)37SWFs have also invested directly in the sustainabili-ty business.GIC participated in a l
258、ate-stage ven-ture,contributing to a$500 million investment in EcoVadis.EcoVadis assists companies in assessing the environmental and social performance of their suppliers.Simultaneously,Temasek participated in an early-stage venture that raised$30 million for Circ.This innovative firm,based in Virg
259、inia(US),employs technology capable of recycling polycotton into reusable fibres,essentially transforming textile waste into usable materials for clothing manufactu-re,and partners with renowned fashion brands like Inditex,Patagonia or Zalando.Lastly,the agritech and agricultural operations sec-tors
260、 attracted significant SWF investments.These industries participated in nine deals totalling close to$600 million.Temasek featured prominently in seven of these transactions,investing in firms like Wildtype,a cellular agriculture firm that cultivates seafood;EFishery,an ag-tech firm offering integra
261、-ted feeding solutions for fish and shrimp farming;and Agriconomie,an agtech e-commerce firm.ADIA also participated in a sizable$194 million transac-tion with UPL Sustainable Agri Solutions,one of Indias largest agtech platforms.In conclusion,SWFs have emerged as significant drivers in the transitio
262、n towards renewable energy and broader sustainability.Two primary trends are discernible:a growing interest in energy networks(which are critical for a successful energy transition and the eventual distribution of hydrogen once it becomes commercially viable)and in energy storage(to counterbalance t
263、he intermittencies of solar and wind energy).Significant investments by SWFs like ADIA,NZSF,and Mubadala have helped catalyze these trends.Furthermore,SWFs have made substantial invest-ments in electric vehicle companies and the wider green economy,underlining their commitment to the sustainability
264、cause.Direct investments in busi-nesses committed to sustainability and in the agri-Source:Sovereign Wealth Research-IE Center for the Governance of Change(2023)1.91.9US$billion55DealsTotal0.40.4112023US$billionDeals1.51.5442022US$billionDeals*(Consumer Cyclical)Electric VehicleConsumer Discretionar
265、y*1.10.50.30.311254N/AN/AN/AN/AN/AN/AN/AN/A1.10.50.30.311254Sustai?a?ilityAgTechAgricultural?eratio?sIndustrials0.0?0.02110.0?0.0211N/AN/AN/AN/AForestryMaterials3.0170.472.71?Grand totalFigure 4In?estin?in t?e?o?Car?on?ransition IndustriesDeal coun?an?o?al?eal?alue?er year.US$billion.3838SOVEREIGN W
266、EALTH FUNDS 2023.GROWTH AND GREEN:SOVEREIGN WEALTH FUNDS ENGAGE INTO SUSTAINABILITY 38tech sector also underscore the alignment of SWFs with sustainability goals.These investments not only attest to the growing importance and potential of renewable energy but also illustrate the commit-ment of SWFs
267、to the sustainability movement in the global investment landscape.THE GREEN RACE IS GLOBALRenewable energy sources deviate from the geogra-phical concentration characteristic of hydrocarbons.The choice of location for investment leans more towards local regulation,incentives,and business environment
268、 stability.Countries with abundant so-lar and wind energy potential do not automatically attract the highest volume of investment.Europe,despite its less favourable geographical condi-tions for solar energy,ranks as the second-highest recipient of FDI between 2010 and 2022,securing investments worth
269、$549 billion.Asia Pacific stands at the forefront,having garnered$711 billion during the same period,even though it does not necessa-rily possess the greatest solar and wind potential6.This illustrates the complex interplay between re-newable energy resources,investor preferences,and the impact of g
270、eopolitical factors on investment decisions.In this context,the US received over 60%of these investments or$3.6 billio,largely due to its mar-ket size and stability,along with the appealing incentives offered by some states and its lead in certain technologies,such as batteries.Excluding the US,the
271、lions share of investment directed itself towards Spain,Germany,India and China.Together they received 2.1 billion.Aside from those biggest economies,Saudi Arabia received approximately$400 million.This position makes sense on a macro level,given that the UAE,Saudi Arabia,and Qatar emerged as the mo
272、st suc-cessful in attracting FDI after the pandemic.Com-0.154.795186.2523Grand total20230.40.5N/A0.000.?N/AN/AN/AN/AN/AUS$billion21N/A11N/AN/AN/AN/AN/ADeals20223.20.10.40.1N/A0.50.30.0?0.0?0.05US$billion9121N/A11111DealsTotal3.?0.40.10.?0.30.0?0.0?0.050.50.?DealsUS$billionU.S.ChinaGermany
273、BrazilSpainIndiaSa?di?ra?iaCanadaI?raelThe?etherland?So?r?e?Figure 5SWF Investments in the Low Carbon TransitionDeal?oun?an?o?al?eal?alue?er?ear.US$billion.6 fDi Intelligence,The Geography of the Switch,2022,The Switch Report,Chapter 1,page 77 Alex Irwin-Hunt,Middle East countries lead post-Covid in
274、vestment rebound,fDi Intelligence,May 10 2023,https:/ May 25 2023).39paring the three years post-Covid to the preceding three years,the UAE saw the arrival of 792 projects;Saudi Arabia,201;and Qatar,177.These figures sig-nificantly surpass those of their European counter-parts,which recorded an incr
275、ease of an average of 120 additional FDI projects per country7.The Middle East offers a compelling case study of sustainability technology.The UAEs Sovereign Wealth Fund,Mubadala,via its subsidiary Masdar,has committed$1 billion to a UK start-up specia-lizing in reducing construction CO2 emissions.T
276、his strategic investment illuminates the UAEs forward-thinking approach to sustainability,addressing unique challenges,including limited water resources and a deep-rooted construction and infrastructure development sector.The start-ups pioneering work in waterless cement production represents an inn
277、ovation with the potential to significantly impact the UAE,a country where water scarcity amplifies the value of such a breakthrough.It is crucial to note that countries leading the ener-gy transition concurrently rank among the largest producers of hydrocarbons.As stated by the US Energy Informatio
278、n Administration,the US,Saudi Arabia,the UAE,and China account for over 40%of total global production.Interestingly,while a portion of the received FDI is channelled to sectors not related to energy,such as tech,business,or financial services,another portion of the FDI flows towards oil and gas deve
279、lopment.This allocation is a response to the energy crisis Europe faces due to the conflict between Ukraine and Russia.On another front,it is worth noting that countries like China and the US demonstrate robust specialization in non-electricity generating climate FDI,especially within the manufactur
280、ing supply chain.And these governments have provided investment incentives or subsidies for many years,enhancing their posi-tion in the sustainability transition.HARNESSING THE RED SEA:PORT AND GREEN ENERGY OPPORTUNITYThe Red Sea region presents a compelling case of how strategic geographical locati
281、ons can drive sustainable development.SWFs in the Middle East,particularly in Egypt and Saudi Arabia,have recog-nized this potential and are actively investing in low-carbon energy sources.Their investments,par-ticularly along the Red Sea and the Suez Canal,are not only diversifying their domestic a
282、nd regional economies but also contributing to global net zero objectives.They have invested heavily in renewa-bles and alternative fuels,with a significant focus on hydrogen production,especially green hydrogen,which serves as a clean substitute for fossil fuels.Egypt had refined its green energy i
283、nitiatives in preparation for the 2022 United Nations Climate Change Conference(COP27).The country colla-borates with foreign partners and its state-owned investors to meet its targets.The Sovereign Fund of Egypt(TSFE)and the Suez Canal Zone have ente-red into a$3 billion agreement to generate green
284、 energy for ships in Ain Sokhna.Furthermore,TSFE,the Norwegian NBIM and Scatec have agreed to collaborate on renewable energy,green hydrogen,and green infrastructure projects in various African countries.On its part,PIF supported the develop-ment of biofuels through its subsidiary,The Red Sea Develo
285、pment Company(TRSDC).What is more,simultaneously the Red Seas strate-gic importance as a trade route is attracting signifi-cant investment in port and logistics infrastructure.Recent commitments from Arab SWFs,including Abu Dhabis ADQ and PIF,have pledged billions into infrastructure development in
286、Sudan and Saudi Arabias Jeddah.Abu Dhabi Ports,a subsi-diary of ADQ is backing a new US$4 billion port in Sudan as part of a US$6 billion investment package.Meanwhile,PIF and other regional SWFs are inves-ting heavily in Jeddah,which is witnessing massive capital inflows.The Ethiopian EIH is securin
287、g access to energy with a 30%stake in the infrastructure development of a modern oil storage facility in Djibouti,able to accommodate the latest generation of vessels.It is the first overseas bet of the SWF launched only in May 2022.Saudi Arabias PIF aspires to be a renewable energy leader and the w
288、orlds main hydrogen exporter.It is convenient to stop and focus on their renewable energy strategies.The Kingdom plans to displace liquid fuels by harnessing renewable energy sour-ces.The ministry aims to increase the share of re-newables in the energy mix to around 50%by 2030.PIF commits to develop
289、ing 70%of that renewable 4040SOVEREIGN WEALTH FUNDS 2023.GROWTH AND GREEN:SOVEREIGN WEALTH FUNDS ENGAGE INTO SUSTAINABILITY 40energy by 2030,in line with the National Renewable Energy Program.Renewable energy is a PIF priority as a way of unlocking the capabilities of promising sectors and enabling
290、the private sector to enhance Saudi Arabias efforts in diversifying the economy.PIF is currently developing a total of five projects,with a cumulative capacity of 8GW and over US$6 billion of investment from PIF and its partners.In 2022,to build capabilities,PIF eyed a stake in Thyssenkrupps hydroge
291、n unit,Nucera,which builds hydrogen plants powered by solar and wind energy.We have witnessed how successfully these long-term industrial-SWF partnerships have grown in the past:Mubadala,GIC,CIC,and KIA have all engaged in long-term relationships with industrial partners in the aerospace,logistics,a
292、utomotive,data centres and renewable energy leaders.So far,PIF has not needed to go overseas to complement its long-term capital strengths with the dynamism of an industrial partner.Since 2018,it has increased its shareholdings in ACWA Power,a Saudi develo-per,operator,investor and co-owner of renew
293、able energy infrastructure.Today,PIF controls 50%of a company with 4,000 employees,a presence in 12 countries and a portfolio that can generate 50.4 GW of power mostly from renewable sources and produ-ce 6.8 million m3/day of desalinated water.In November 2022,ACWA Power established a joint venture
294、with Badeel,a wholly-owned PIF subsi-diary,to develop the Middle East and North Africas largest photovoltaic solar project with a capacity of 2,060 MW in Makkah province,western Saudi Arabia.Yet,the ACWAs ambitions go beyond the Kingdom.ACWA Power signed an agreement to de-velop a large-scale wind e
295、nergy and battery storage project in Kazakhstan with the countrys Ministry of Energy and Samuruk-Kazyna,the national sove-reign wealth fund.The deal will cover a 1GW wind energy and battery energy storage system(BESS)project,scheduled for completion in 2027.It is the first transaction made by ACWA i
296、nto the Republic of Kazakhstan,where the company said an initial investment of$1.5 billion will be made,supporting Kazakhstans aims of meeting 50%of its energy needs from renewable sources by 2050.Only in 2022,ACWA Power signed deals to expand renewa-ble energy capacities,develop green hydrogen and
297、green ammonia or launch desalination facilities in Azerbaijan,Uzbekistan,Indonesia,South Africa,South Korea,Senegal,Egypt,and Oman.Many of those large-scale deals include the participation of the national strategic SWFs as co-investors,sophis-ticating the web and reach of SWFs worldwide and reinforc
298、ing their development roles.AWAY FROM THE STOCK PICKING SIDELong-term portfolio management extends beyond mere stock picking and requires a continual evalua-tion of businesses.At its core lies sustainability,a critical factor for enduring portfolio performance.As SWFs with sizable assets,its crucial
299、 to ensu-re that the investment thesis aligns with current and potential future scenarios.SWFs have notably adjusted their strategies to advocate for sustaina-bility and,what is more,their activism has gone to the boardroom,increasing their pressure on proxy voting.One example is the One Planet SWFs
300、(OPSWF)initiative.Established in Paris in 2017,OPSWF promotes the integration of climate-related finan-cial risks into asset management while encouraging knowledge sharing and maintaining agility.Initially launched as a working group of six founding SWFs,the OPSWF Network has since grown to 46 mem-b
301、ers,comprising 18 SWFs,18 asset managers,and 10 private investment firms,with over$37 trillion in assets under ownership and management.In 2018,OPSWF proposed a framework with 12 re-commendations based on three guiding principles:Alignment,Ownership,and Integration.Align-ment advocates for climate c
302、hange considerations in decision-making;Ownership encourages busi-nesses to address climate issues;and Integration urges the consideration of climate risks in invest-ment management.These principles signify a shift towards sustainability in investment practices.By 2022,substantial progress had occur
303、red across these guiding principles.The OPSWF aggregates some of the key actions developed by its members in recent years.The establishment of an inaugu-ral internal ESG Report by KIA,the SWF of Gabon(FGIS)joined the UN-convened Net-zero Asset Owner Alliance,the first African SWF,to the pledge by TS
304、F to invest$40 billion in green hydrogen pro-jects.Some of these actions just reveal the interest of SWFs in aligning processes,investments,and culture to a low-carbon economy.41For instance,Mubadala embarked on an impor-tant project to quantify the carbon footprint of its corporate operations and d
305、irect public and private investments,according to Derek Rozycki,head of responsible investing at Mubadala.The firm also conducted a detailed examination of its most car-bon-intensive assets,based on Task Force on Clima-te-related Financial Disclosures(TCFD)guidelines.NBIM,on its part,published a 202
306、5 Climate action plan.The plan sets a goal of net-zero emissions by 2050 for all companies in its portfolio.This aim includes the creation of credible initial targets and strategies for reducing both direct and indirect emissions from portfolio companies.By 2025,the SWF aims to establish a comprehen
307、sive system for measuring its exposure to climate risk.Furthermo-re,by 2040,it expects all portfolio companies to have net-zero emission targets.In addition,NBIMs Council of Ethics routinely updates its publicly accessible list of companies under observation and exclusion.Changing the benchmark port
308、folio has been a critical decision for some funds.The New Zealand NZSF made a determined move towards sustainabi-lity by redirecting 40%of its portfolio,worth NZ$25 billion,to Paris-Aligned Indices.This new strategy includes two MSCI Paris-aligned indices intending to achieve net-zero emissions by 2
309、050.This change marked a move away from the MSCI ACWI IMI in-dex towards tailored benchmarks.NZSFs CEO,Matt Whineray,stated that discussions about climate change have come to a close.The global investment community must now redirect their capital in ways that enable the energy transition and mitigat
310、e glo-bal warming.Incremental alterations will not prove adequate.To distribute capital effectively,markets must accurately account for the environmental and societal costs of business activities,he asserted.SWF influence extends to exclusion lists and corpo-rate boardrooms as well,as the topical de
311、bate be-tween divesting or engaging.Different SWFs pursue different methodologies.For instance,the Irish ISIF has adopted its Fossil Fuel and High Carbon Exclu-sion list that excludes 256 companies.Mubadala reports that firms constituting a large proportion of the Mubadalass emissions have made net-
312、zero commitments.Finally,NBIM expressed its intent to become a more aggressive active owner of ESG poli-cies.NBIM warned the directors and boards of com-panies without a target to reach net zero emissions that the fund would“absolutely”vote against them.It is interesting to notice that only 10 per c
313、ent of companies have a clear net zero target already in place,according to Nicolai Tangen,its CEO.NBIM voted against resolutions in multiple shareholder meetings since then,but not in every case as it is acknowledgeable of setting reasonable target goals,as in the recent case of BP,when it did not
314、support an investor-led proposal to align to Paris due to the lack of a precise roadmap.THE SHIFT TO CONSCIOUSNESS AND SUSTAI-NABILITYForeign Direct Investment(FDI)in renewable energy sectors has shown sustained growth over the past decade,outperforming fossil fuels for the first time in 2019.SWFs a
315、re instrumental in this transi-tion towards sustainability,channelling capital into green technologies despite their substantial funding from hydrocarbon sales.SWFs have broadened their investment spectrum beyond energy generation resources like solar,wind,or hydrogen to include energy networks,ener
316、gy storage,and manufactu-ring supply chains.This wider perspective also en-compasses sectors like electric vehicles,agriculture,sustainability,and recycling.The participation of SWFs in the transition towards renewable energy has seen two notable trends:a growing interest in energy networks and ener
317、gy storage.Significant investments by SWFs like ADIA,New Zealand NZSF,Saudi Arabias PIF and Mubada-la have helped catalyze these trends.Furthermore,SWFs have made substantial investments in electric vehicle companies and the wider green economy,underlining their commitment to the sustainability caus
318、e.Direct investments in businesses committed to sustainability and in the agritech sector also un-derscore the alignment of SWFs with sustainability goals.3SOVEREIGN WEALTH FUNDS IN LATIN AMERICA:THE POST-PANDEMIC SCENARIO 3Javier Capap(PhD),Director,Sovereign Wealth Research,IE Center for the Gover
319、nance of Change Rodrigo Ace(MBA),Associate Director,Sovereign Wealth Research,IE Center for the Governance of Change Romn le Coz,Research Fellow,Sovereign Wealth Research,IE Center for the Governance of Change 433.Sovereign Wealth Funds in Latin America:the post-Pandemic Scenario THE INFLUENCE OF NA
320、TURAL RESOURCES ON LACS SWFS:COPPER,OIL AND RECO-VERYLatin America and the Caribbean(LAC)have shown resilience in the face of the Covid-19 pan-demic.Following a significant GDP loss in 2020 due to the Covid-19 pandemic,Latin America and the Caribbean rebounded with substantial growth rates in 2021 a
321、nd 2022.Sovereign Wealth Funds(SWFs)played a pivotal role in stabilizing the fiscal health of the governments in the region during the crisis,with half of the SWF resources utili-zed to combat the pandemic economic and social negative effects.By 2022,these funds saw new deposits amounting to$8.5 bil
322、lion.A key driver for this recovery was the favourable tailwinds from copper and oil prices,particularly in countries like Peru,Chile,and Guyana.However,SWFs in other parts of the region faced challenges due to rising interest rates,with no new deposits since 2019.Despite the political volatility,th
323、e collaboration between SWFs and Development Banks presents a significant opportunity for sustainable economic development.With a historic GDP loss of 6.8%in 2020,as re-ported by the Inter-American Development Bank(IDB),the region was among the hardest hit in the developing world.However,successful
324、contain-ment of the virus paved the way for a swift reco-very,with GDP growth rates of 7%and 4%in 2021 and 2022,respectively,according to the Internatio-nal Monetary Fund(IMF).Despite this resurgence,the IMF anticipates a gradual return to long-term average growth rates,projecting a much weaker grow
325、th of 1.6%in 2023 and 2.2%in 2024.The Covid-19 crisis prompted governments to implement exceptional measures,resulting in a significant increase in fiscal deficits and overall debt.Consequently,the debt-to-GDP ratio in the region is expected to exceed 70%in the coming years.Amidst these challenges,c
326、entral banks have demonstrated a commitment toward fiscal and monetary orthodoxy.Excluding Venezuela and Argentina,regional inflation rates dropped from 7.8%in 2021 and 2022 to a projected 5.4%in 2023 and 3.7%in 2024.The IMFs Regional Economic Outlook for the Western Hemisphere,released last April,e
327、mphasizes the importance of fiscal policy in alleviating the burden on central banks.By slowing domestic demand,fiscal policy can facilitate interest rate reductions and create greater policy flexibility to address future economic shocks.The IMF suggests contractionary fiscal strategies to temper do
328、mestic demand,providing an oppor-tunity for interest rates to decrease and thus,reducing the risk to financial stability.But the challenge is tough as it presents policymakers with the formidable task of locating savings without undermining crucial social programs.Furthermore,they must ensure the eq
329、uitable distribution of tax responsibilities,requiring the affluent to pay a fair share.A quite complex menu of needs and wants.A notable peculiarity of the ongoing crisis is the shift in the regions primary creditors.The tradi-tional foreign sovereign bondholders are gradually being replaced by mul
330、tilateral organizations that have provided these lines of credit.Enabled by the global financial facilities designated for the region,a reconfiguration of the regions interna-tional creditors is underway.In its 2022 Annual Report,the IMF declared that it approved financial assistance worth$112 billi
331、on,with 90%directed towards Latin America and the Caribbean.This assistance chiefly benefitted Argentina($42 billion via an extended fund facility),Mexico($47 billion via a flexible line),and Colombia($9.6 billion via another flexible line).1SOVEREIGN WEALTH FUNDS 2023.SOVEREIGN WEALTH FUNDS IN LATI
332、N AMERICA:THE POST-PANDEMIC SCENARIO 44stability amidst persisting economic challenges.This chapter delves into the role of SWFs in Latin America and the Caribbean and evaluates their potential in addressing these issues while securing the regions financial future.REVITALIZED RESOURCES:COPPER AND OI
333、L DRIVE LATIN AMERICAS SWF GROWTH The region is home to 12 Sovereign Wealth Funds(SWFs),with those of Brazil,Venezuela,Bolivia,and Suriname currently inactive.As of the close of 2019,the remaining eight operational funds collectively managed assets worth$42.2 billion.This chapter investigates the repercussions of the post-Covid economic recovery in the region,the utilization of SWF resources durin