Temasek Named Most Active Sovereign Wealth Fund Again

There were 92 sovereign wealth funds in the world managing over $7 trillion in 2014, an increase of $1.2 trillion since the previous year, as per the 4th Sovereign Wealth Fund Report by ESADE, KPMG and ICEX-Invest in Spain. Since 2010, 22 new funds have been created, and 25 countries are considering the setting of a new fund. As per the report, SWFs are concentrated mainly in four areas, Middle East, China, Southeast Asia and Norway.

SWFs invested nearly $90 billion in 140 deals during 2014. "On the podium of the most active funds, Temasek led the field again for the second consecutive year, with more than 40 transactions, followed by GIC with 23. The third place was taken by Norway's sovereign wealth fund GPFG (managed by Norges Bank Investment Manager, NBIM)."

Singapore's GIC and Temasek, South Korea's KIC and Hong Kong's HKMA were among the sixteen biggest funds, managing assets worth $987 billion.

Spain is regaining investor confidence as it has managed to recover from the crisis. The country attracted more than 4.6 billion. These investments were largely in the real estate sector.

Other Findings Of The Report Are:

• Investments were concentrated in sectors such as real estate ($21 billion) and infrastructure ($20 billion), and in countries such as the US, which received 30 investments, and China, which received 17. However, agribusiness, venture capital, digital economy, art and football also attracted SWF money.
• SWFs are investing significantly in start-ups, the report says, which may lead to the rise of sovereign venture funds. As per the report, "Sovereign wealth funds' investments in start-ups are not confined to emerging markets. We have stressed how US state agencies invest in new technologies. In Europe, several countries have funds of funds for investing in venture capital." The Chinese government made an impressive initiative in the field after it announced the creation of a $6.5-billion government venture capital fund in 2015. At present, China has 83 operative venture capital funds, with a capacity of $6.7 billion.
• SWFs have started to participate in European football through the sponsorship route. "Today, sovereign funds and state-owned enterprises from Dubai, Abu Dhabi or Qatar invest close to $300 million yearly in European football," says the report.
• Some funds might also want to invest in art and heritage assets. While this distinct avenue is not suitable for every fund, the report argues that some group of countries and institutes are uniquely positioned to invest in them based on long-term portfolio strategies. "From an investor's point of view, the implication is clear: only institutions with inter-generational investment horizons - often referred to as 'patient capital' - can afford to seriously consider building a meaningful allocation to world-class heritage assets," says the report.
• Many middle-eastern funds have started to channelise their investments in two new sectors, Islamic finance and the halal industry, after the beginning of the financial crisis.