Mideast Domination of Sovereign-Backed Deals at 15-Year High - Bloomberg

Mideast Domination of Sovereign-Backed Deals at 15-Year High - Bloomberg

Sovereign wealth funds controlled by oil-rich Middle East countries have furthered their domination of deals done by global state-backed investors to the highest levels in about 15 years.

Institutions including Saudi Arabia’s Public Investment Fund, Abu Dhabi Investment Authority and Qatar Investment Authority made up 54% of the $96 billion deployed by state-controlled funds globally in the first half of 2024, according to data from consultancy GlobalSWF. That’s the highest rate since 2009, it said.

The figures reinforce how important the Middle East’s funds, which together control over $4 trillion of assets, have become for global capital flows. Bankers, investment titans and tech industry chiefs from around the world have been increasingly drawn to the region to help back corporate buyouts, raise new funds or finance their investment plans over the past few years.

“While the market uncertainty has invited global funds to be cautious, Gulf-based and particularly, Abu Dhabi-based funds, have received significant windfall from oil and are more active than ever,” Diego Lopez, managing director of GlobalSWF said in a report.

Still, Saudi Arabia’s PIF remained the most active sovereign fund in the world in the first six months of the year, fueled by asset transfers from the government. The Saudi government has had to find other ways to finance the PIF’s investment activities because oil prices are not high enough to cover state spending.

The prominence of Middle East funds has been rising at a time when many global peers have reduced spending. Asian funds including GIC Pte and Temasek Holdings Pte are among those to have cut investments, dragging down overall deployment by state-backed investors compared to the same period last year, according to the report.

While in absolute terms the amount invested by sovereign funds from Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Oman and Bahrain has fallen, as a portion of total state-controlled investment globally it has risen, the data show.

Not all of this cash is flowing out of the region though. For example, the PIF’s largest deal was domestically focused. While Lunate, an Abu Dhabi-based fund that manages $105 billion, acquired a stake in the largest office tower in Dubai.