May 20, 2024

Saudi Arabia’s Public Investment Fund outpaces Singapore’s GIC with US$31.6 billion splurge in 2023

Saudi Arabia’s Public Investment Fund (PIF) emerged as the world’s most active sovereign investor last year, boosting its deal activity even as most global peers including GIC and Temasek Holdings slashed spending.

PIF deployed US$31.6 billion in 2023, according to research consultancy Global SWF. That was higher than the US$20.7 billion it invested the previous year, an increase that contrasts with a wider trend – globally state-owned investors deployed US$124.7 billion, about a fifth less than the previous year.

The declines were led by GIC, which cut the amount of capital deployed by 46 per cent to US$19.9 billion and lost its spot as the world’s most active sovereign wealth fund for the first time in six years. Temasek also reduced new investments by 53 per cent to US$6.3 billion against a backdrop of volatile markets, which led the two Singapore-based investors to report worsening returns.

Global SWF said much of GIC’s decline related to investments across developed markets. Singapore’s state investors continued to be active in emerging markets like India, with deals including GIC’s US$1.4 billion joint venture with Brookfield India Reit and Temasek’s increased stake in Manipal Health Enterprises.

(From left) Nicolas Aguzin, CEO of HKEX; Abdulmajeed Alhagbani, head of securities investments at PIF; Yazeed Al-Humied, deputy governor of PIF; Financial Secretary Paul Chan; SFC chairman Tim Lui and CSOP CEO Ding Chen at the listing ceremony of the CSOP Saudi Arabia ETF at the HKEX on November 29, 2023. Photo: Edmond So

“Singaporean investors are being more cautious and we’ve seen that reflected in the numbers,” Global SWF said. “Gulf sovereign wealth funds have increased their domination of the global transaction activity to the detriment of Singaporean and Canadian funds, and now represent almost 40 per cent of all investment value deployed by sovereign investors.”

Overall, sovereign wealth funds controlled by the hydrocarbon-rich governments of Abu Dhabi, Saudi Arabia and Qatar took five spots on a list of the top 10 most active funds last year.

That trend could be set to continue. The governments of the United Arab Emirates, Saudi Arabia, Qatar, Kuwait, Oman and Bahrain are set to control about US$4.4 trillion in gross foreign assets by the end of 2024, two-thirds of which is likely to be managed by sovereign wealth funds, according a report issued by the Institute of International Finance in December.

The region is home to a gamut of sovereign funds, which have become an increasingly prominent source of cash for international deals after a surge in energy prices in 2022 left most Gulf government budgets in surplus.

Singapore’s Temasek, Saudi’s PIF back China’s consumption stocks, filings show

The PIF was behind the largest sovereign-backed deals of the year, either directly or through its subsidiaries. These include its nearly US$5 billion acquisition of US gaming company Scopley through Savvy Games Group and a US$3.6 billion acquisition of Standard Chartered’s aviation leasing business through Avilease.

The Saudi fund was also behind significant domestic deals to help support the diversification of the economy under a plan by Crown Prince Mohammed bin Salman, who is also the PIF’s chairman.

In September, the fund acquired the steel business of Sabic Basic Industries in a US$3.3 billion deal that helped push PIF’s domestic investment to around 42 per cent of total deployment in 2023.

“The variety of deals shows the unparalleled bandwidth and reach of PIF and its subsidiaries,” Global SWF said in the report.

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