Saudi Arabia’s PIF and five other Gulf SWFs are projected to manage $18 trillion by 2030. The region now controls 40% of global SWF assets. Key trends include an emphasis on Asia, particularly China, and active engagement in Africa’s mining sector. Despite competitive pressures, Gulf SWFs are enhancing their performance and talent acquisition strategies.

Saudi Arabia’s Public Investment Fund (PIF) and five key regional sovereign wealth funds (SWFs) are projected to manage $18 trillion in assets by 2030, reflecting a 50 percent increase from the end of 2024. A report by Deloitte Middle East reveals that the Gulf region now possesses approximately 40 percent of the global SWF assets, emphasizing its significant role in the investment landscape. Notably, Saudi Arabia’s PIF ranks sixth globally with $925 billion in assets, while the Abu Dhabi Investment Authority leads the region with $1.05 trillion.

Julie Kassab, the sovereign wealth fund leader at Deloitte Middle East, commented on the region’s prominence, stating the Gulf is a hub for innovative investment strategies and operational excellence. She noted that these funds are not only expanding geographically but also improving internal capabilities, thereby elevating industry standards in performance and governance. The continued aggressive investment approach is underscored by a $137 billion deployment in 2023 and the first nine months of 2024 combined.

Deloitte identifies five primary players in this sector: Saudi Arabia’s PIF, Abu Dhabi Investment Authority, Mubadala, Abu Dhabi Developmental Holding Company, and Qatar Investment Authority. Since 2000, the global tally of sovereign wealth funds has nearly tripled, currently numbering around 160-170, with 13 new funds launched from 2020 to 2023.

A pivotal trend highlighted in the analysis is the growing focus on fast-expanding markets outside traditional Western investment territories. Gulf SWFs are increasingly engaging with Asia, notably investing around $9.5 billion in China during the first nine months of 2024. Both the Abu Dhabi Investment Authority and the Kuwait Investment Authority feature prominently among the leading shareholders in Chinese A-share firms, capitalizing on diminishing Western involvement and leveraging their strategic partnerships.

Additionally, Gulf wealth funds are turning their attention to Africa, especially its mining sector. The UAE and Saudi Arabia have shown interest in high-risk ventures within Africa’s extractive industries, both independently and through equity in multinational mining corporations. This approach aligns with emerging investment vehicles like “Royal Private Offices,” which manage approximately $500 billion in assets.

In facing competitive pressures, Gulf wealth funds are prioritizing enhanced internal performance, risk management, and investment oversight. They have adopted a more proactive stance, including an openness to divestment and demands for improved reporting from portfolio companies. Furthermore, competition for skilled professionals has intensified, with Gulf SWFs employing an estimated 9,000 individuals and offering competitive packages to attract top talent, particularly from established international funds.

The report indicates that Gulf governments are also revising their strategies regarding strategic assets, leading to the establishment of domestically-focused funds designed to collaborate with international partners rather than compete against established entities. Despite potential economic headwinds from geopolitical issues and fluctuating commodity prices, these challenges may ultimately foster greater efficiency and innovation in fund management practices.

In summary, the Gulf region, led by Saudi Arabia’s PIF, is set to redefine its investment landscape with a projected $18 trillion in assets by 2030. The increasing focus on Asia and Africa, coupled with proactive measures and enhanced internal capabilities, positions these funds strategically despite global uncertainties. The continuing evolution of SWFs indicates a strong commitment to innovation and excellence in investment management.

Original Source: www.arabnews.com

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