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

Middle Eastern sovereign wealth funds accounted for more than half the value of all deals done by global state-backed investors this year، highlighting the oil-rich nations’ growing domination at a time when many peers are reducing spending.

Institutions including Saudi Arabia’s Public Investment Fund، Abu Dhabi Investment Authority and Qatar Investment Authority backed deals worth $52 billion in the first half of 2024، according to data from consultancy GlobalSWF.

That’s 54% of the total $96 billion deployed by state-controlled funds globally — the highest proportion since 2009. Mideast wealth funds’ contribution stood at 39% in the second half of 2023.

Global capital flows

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.

Cutting investments

Meanwhile، Asian funds including GIC Pte and Temasek Holdings Pte are among those to have cut investments. That’s dragged 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.

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