Assets under management by global sovereign wealth funds and public pension funds hit an all-time high of $ 31.9 trillion in 2021, spurred by a recovery in the US stock market and rising oil prices, according to a report from the tracker of the Global SWF industry.
Assets held by sovereign wealth funds rose 6% to $ 10.5 billion during the year, while those managed by public pension funds rose 8.7% to $ 21.4 billion , according to the annual report on public investors.
These public investors have invested more capital than in any of the previous six years – both in terms of deal value and volume – collectively spending $ 219 billion on 854 deals.
Sovereign wealth funds deployed $ 106.1 billion in 500 transactions, up 19% annually, while pension fund investments reached $ 112.9 billion in 354 transactions.
Singapore’s GIC wealth fund accounted for most of the investments, allocating $ 34.5 billion in 110 deals, nearly double what it did in 2020. Almost half of that capital was invested in real estate, with an emphasis on the logistics sector.
Public investors were also active sellers in 2021, ceding $ 32.1 billion through 45 deals, half of which involved real estate and infrastructure assets.
Emerging markets have lagged in terms of investment, attracting just 22% of the capital in 2021, making it one of the lowest numbers in the past six years, according to the report.
Sectors that have grown in importance during the year are healthcare, retail, consumer and tech, all of which have attracted venture capital.
Venture capital deployed by public investors has “absolutely exploded” in 2021, jumping 81% year-on-year to a record $ 18.2 billion, with the number of deals more than doubling to 328, according to the report.
“While venture capital remains a small part of SOI’s overall portfolios, allocations give them exposure to market disrupters with high growth potential,” the report says. “Valuations are hitting historic highs encouraged by rapid pace of exits and strong liquidity potential, including IPOs [initial public offerings] and Spas [special purpose acquisition companies]. “
Only 120 of those venture capital investments went to Silicon Valley, with the rest spread across 32 countries. Public investors have opted for late-stage funding rounds, including IPOs, signaling the entry of newer and more risk-averse investors, according to the report.
For the first time, invested sovereign wealth funds and pension funds deployed more capital in renewables than in oil and gas, according to the report. They spent $ 22.7 billion on 37 green investments, including stakes in brownfield assets, investments in new facility assets, stocks in listed companies, and commitments to new funds focused on the market. weather.
“This step had been in preparation for a few years and concluded a trend that was driven by social pressure and financial returns and accelerated by the Covid-19 pandemic,” the report says.
Global SWF named Abu Dhabi’s Mubadala Investment Company as “Fund of the Year” in its annual report, as the emirate’s strategic investment arm exhibited high levels of business activity, played a crucial role in his country in the economic recovery and has concluded agreements with governments around the world. .
“As a responsible investor, we are committed to supporting Abu Dhabi’s economic diversification while leaving a positive and lasting impact on the communities where we invest globally,” said Ahmed Al Calily, Chief Strategy Officer and of Mubadala risks, cited by Global SWF. in the report.
In 2022, global investors will continue to watch China closely, according to the report.
Sports, space and healthcare are expected to be areas of interest for public investors this year.
The Winter Olympics, which will be held in Beijing in February, could provide investment opportunities.
“We wouldn’t be surprised if we saw more clubs acquired or sponsorship deals made … by Gulf sovereign wealth funds over the next 11 months,” the report said.
The space race could also finally “arouse significant interest” given the expected boom in space tourism, he said.
Healthcare will continue to be an “important part” of the portfolios and activities of sovereign investors.
“The pandemic is changing the way SOI invests and healthcare has become an important source of long-term returns. The coronavirus is expected to be a continuing, multi-year threat, giving impetus to the radical change in biotechnology and health technologies that has changed the dynamics of research and development in medicine, ”the report said.
As 2022 progresses, public investors will increase their focus on research and development in virology with a view to tracking viral mutations. Demographics will also influence long-term trends with a growing focus on the diseases and needs associated with growing wealth and an aging population, he said.
In 2022, Israel, Namibia, Mozambique and Ethiopia are expected to launch sovereign wealth funds.
Global assets under management are expected to reach $ 53.6 billion by the end of the decade, Global SWF said in its 2030 forecast for public investors.
Updated: January 1, 2022, 13:36