Middle Eastern sovereign wealth funds doubled investments in western economies in 2022

The Middle Eastern sovereign wealth funds will be stronger in the current market conditions, the Global SWF's 2023 annual report stated on Wednesday.

According to the report, the funds had doubled their investments in Western economies—the US and Europe—from $21.8 billion in 2021 and $51.6 billion in 2022.

The report said that Middle Eastern investors are driving forward with the pursuit of “cheap” assets in Europe (including the UK) and in the US, with more limited competition coming from their international peers. The report added that nearly 40 Middle Eastern state-owned investors manage $4.8 trillion in financial capital. 

Of the top 10 most active funds, five were from the Middle East region. But 2022 was also the first year that the SWFs shrank in value, totalling $1 trillion. Also, PPFs have reduced their assets by $1.3 trillion. However, the Gulf-based SWFs are in a good position, thanks to the average oil price and peg of their currencies to the dollar.

"For those GCC economies with lower fiscal expenditure, this translates into large surpluses, which were transferred to some of the SWFs at year-end. Therefore, the large savings funds that are more liquid and internationally focused, including Abu Dhabi’s ADIA, Kuwait’s KIA and Qatar’s QIA, are set to receive significant inflows of capital," the report said.

The funds have large portfolios of domestic assets like Abu Dhabi's ADQ and Mubadala, Mumtalakat of Bahrain, and Dubai's ICD.

The report added, of this year’s 60 mega-deals, i.e., tickets deployed by sovereign investors of $ 1 billion or more, 26 were carried out by Middle Eastern SWFs, and 17 of them were in American or European assets, according to the report.

The largest commitment was made by ADIA when it invested $4 billion in Ardian’s fund ASF IX and $2 billion for joint co-investments. 

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