Gulf sovereign wealth funds collectively stepped up dealmaking over the last three months, defying expectations that the Iran war would subdue their investment appetite.
The five biggest spenders–split across Saudi Arabia, the UAE and Qatar–collectively spent almost $26bn during March, April and May, with most of the capital flowing into developed market assets.
They comprised Saudi Arabia’s Public Investment Fund (PIF), the UAE’s Mubadala, Abu Dhabi Investment Authority (ADIA) and L’imad, as well as the Qatar Investment Authority (QIA).
“These vehicles…have shown no sign of slowdown (yet), with a stronger average pace in the past quarter, than in the five years before the start of the war,” industry specialist Global SWF said in its latest report published on 1 June.
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The QIA was the only fund that dropped its pace, investing about $2bn less per quarter since March 1.
The report noted that while capital has continued flowing into U.S. companies and funds, both ADIA and PIF showed a preference for investing in China and emerging markets.
Since the start of the Iran war, PIF has invested $6.1bn in emerging markets, more than double the $2.43bn it has deployed in developed market assets. Adia has put $3.32bn into emerging markets and $1.58bn into developed market investment opportunities.
However, the PIF’s focus is set to shift towards its domestic economy, with about 80% of its portfolio now focused internally.
In mid-April, the near $1trn fund launched a new five-year investment strategy that will narrow its focus to six areas: tourism and entertainment; urban development; advanced manufacturing; industrials and logistics; clean energy and renewables infrastructure; and Neom–a multi-billion-dollar smart city and economic zone being built in the Tabuk province of northwestern Saudi Arabia.
Meanwhile, in January this year, Abu Dhabi’s government brought together the Abu Dhabi Development Holding Group (ADQ) and L’imad to centralize the emirate’s strategic operating companies and create a $300bn “sovereign investment powerhouse.”
L’imad’s investment mandate focuses on a wide array of sectors, including infrastructure, property, financial services, asset management, advanced industries, technology, urban mobility, and smart cities.
In addition to managing domestic “national champions” (such as Abu Dhabi Ports, Etihad Rail, and various real estate assets), L’imad’s goal is to actively participate in major international deals and consortiums that build globally competitive industrial ecosystems that ensure that both supply lines and energy sources are controlled from origin to destination.
In May, L’imad unveiled a $30bn venture targeting energy, transportation and logistics opportunities across the Middle East and Central Asia as part of a consortium that includes BlackRock’s Global Infrastructure Partners and Singapore’s Temasek Holdings.
L’imad is also looking to partner with PIF and QIA to commit roughly $24bn in equity to Paramount Skydance’s planned $110 billion takeover of Warner Bros. Discovery.
The deal, approved by shareholders in April, is due to be completed between July and September this year, subject to regulatory approval.
The six GCC states combined boast some of the biggest sovereign wealth funds in the world – collectively managing $5.7trn in aggregate assets. Despite a year of conflict and volatility, the appetite for investment shows little sign of waning.
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