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PIF tops the list of SWFs globally thanks to a flurry of investments at home, abroad: The Public Investment Fund has ranked first in 2024 Global SWF report (pdf) with an 33% y-o-y increase in investments in 2023 to USD 31.6 bn, wrapping up some 49 transactions and dethroning Singapore’s sovereign wealth fund Government of Singapore Investment Corporation (GIC). This is the first time in five years that GIC loses its top rank on the list, moving down to the second place.
The methodology: Global SWF tracks 653 state-owned investors, including sovereign wealth funds (SWFs), public pension funds, and central banks, which jointly manage USD 49.7 tn in assets.
Here’s everything you need to know:
PIF flexed the most muscle in 2023: Last year, the fund acquired US gaming company Scopely for USD 4.9 bn for, via subsidiary Savvy Games Groups. It took over Standard Chartered’s aircraft leasing division in a USD 3.6 bn purchase and SABIC’s steel unit Hadeed for USD 3.3 bn. This is in addition to transactions involving Nintendo in Japan, Vale Basic Materials in Brazil, Heathrow airport and Rocco Forte Hotels in the UK, among others.
Extreme diversification: “The variety of [transactions] shows the unparalleled bandwidth and reach of PIF and its subsidiaries, which are forming a wide net to capture any value-add for Saudi Vision 2030,” said Global SWF Managing Director Diego Lopez.
A victory lap for PIF’s co-investors: The fund has established strategic joint ventures in the mining, automotive, tire and steel sectors with Ma’aden, Pirelli, Hyundai, Baosteel and Aramco.
The value of the fund’s listed US equities grew 18% on an annual basis: While the fund didn’t make any major changes to its positions, the rise came on the back of an increase in the value of existing stocks. Lucid Motors continues to be the fund’s largest public holding with a 63% stake.
A penchant for EVs? PIF directly invested in EV manufacturing and the entire automotive value chain in 2023. It began its affair with automaker Lucid back in 2018 when it pumped USD 1 bn in the Tesla rival, in addition to launching its own EV maker Ceer in a JV with Taiwan’s Foxconn.
About 42% of the fund’s total investments where in Saudi Arabia as PIF balances a mandate to create wealth abroad while deploying capital at home to drive the transformation of the economy.
Looking into its crystal ball, Global SWF thinks:
- Norway’s Norges Bank will be the world’s largest SWF by assets under management by 2030, followed by PIF with USD 2 tn in AUM and then Japan’s GPIF;
- Neom will launch an airline this year.
Big props to the Crown Prince: The report notes that while PIF is the oldest wealth fund in the Gulf, it wasn’t until Crown Prince and Prime Minister Mohamed bin Salman kickstarted its overhaul in 2015 that it pushed into foreign investments.
NDF got a mention, too: The report highlighted the National Development Fund’s agreement to fund the construction of the world’s largest green hydrogen production plant to be built in Oxagon city at NEOM.
THE REGIONAL ANGLE
GCC SWFs maintain presence in the top ten: These include the PIF, UAE’s ADIA, Mubadala and ADQ, along with Qatar’s QIA, referred to as the “oil five” in the report. In 2023, the AuM of GCC SWFs reached a historical peak of USD 4.1 tn, and investments worth USD 82.3 bn.
The report named the GCC its “region of the year” thanks ot “sustained high level of oil prices. Gulf SWFs have reaped the rewards of the fiscal windfalls and recovered quicker than others from the 2022 financial markets debacle.”
THE INT’L ANGLE
Emerging markets are pocketing more investments than any other region: Some 50% of the investors acquired positions in emerging markets more than any other region, with China, Indonesia, Brazil and India attracting a lot of attention.
Investors were most bullish on real estate: More than 25% of investments were channeled into the real estate sector, while the financial sector secured 19% and the infrastructure sector 18%.
Norway was the 2023 fund of the year: The fund of the year award was given to the co-chief investment officers of fund manager Norges Bank Investment Management (NBIM), Daniel Balthasa r and Pedro Furtado Reis. NBIM invests on behalf of the Norwegian Government Pension Fund Global (GPFG).
WORTH READING
#1- The report draws a very interesting comparison between the Saudi and UAE approaches to envisioning the roles of and managing their SWFs in pages 38 and 39.
#2- Paul O’Brien, the former deputy CIO of the Abu Dhabi Investment Authority, has interesting views on how to “mix and match” investments in 2024 — see page 19.
