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UAE wealth funds lead as AUM set to hit $2.2 trillion in 2024

The AUM of SWFs from the GCC, including the “Oil Five,” is forecast to reach $7.3 trillion by 2030

Published: Wed 2 Oct 2024, 9:10 PM

Updated: Wed 2 Oct 2024, 9:11 PM

By
Issac John

The Abu Dhabi Investment Authority headquarters. — File photo

The UAE sovereign wealth funds are leading GCC peers with their combined assets under management (AUM) on track to reach $2.2 trillion by the end of 2024, followed by Saudi Arabia, with $1.12 trillion, according to data provider and consultancy Global SWF.

The AUM of SWFs from the GCC, including the “Oil Five,” is forecast to reach $7.3 trillion by 2030 with their investment in the first nine months of 2024 hitting $55 billion. The ‘Oil Five’ SWFs, include the Abu Dhabi Investment Authority (Adia), sovereign investors ADQ and Mubadala, Saudi Arabia’s Public Investment Fund and the Qatar Investment Authority.

The new investments during the first nine months of this year were across 126 transactions and represent around 40 per cent of all deals done globally by state-backed investors, on par with 2023 figures.

The GCC SWFs currently manage $4.9 trillion in capital and are scheduled to break $5 trillion in early 2025 and $7.3 trillion by 2030 while their total AUM are expected to hit $10.2 trillion by the end of the decade.

There are 877 companies listed in the seven stock exchanges of the GCC, with a market cap of $ 4.3 trillion, and 70 per cent is owned by the states or state-owned investors, according to data provided by Global SWF.

Mubadala, Abu Dhabi’s second-biggest wealth fund, said in its annual report that its AUM rose by 9.5 per cent in 2023 to $302.2 billion (Dh1.11 trillion). Mubadala deployed Dh 89 billion in sectors including technology, digital infrastructure, life sciences, renewable energy and private credit. Its portfolio mix remained broadly similar YoY, with 38 per cent direct and indirect in private equity, 25 per cent in public markets and 16 per cent in real estate and infrastructure. Mubadala joined Global Infrastructure Partners in May to invest in industrial chemical producer Perdaman’s $4.2 billion Western Australia Urea project

According to Global SWF, while a significant part of the GCC SWFs’ investments were routed to the US and the UK, China’s growing appeal has drawn a total of $9.5 billion in capital from the GCC, with SWFs acquiring high-quality assets at relative discounts as many Western investors have been pulling out of the Asian giant over increasing regulatory restrictions, market volatility and a slowing down of the economy.

“Sovereign investors such as Adia have traditionally invested over 50 per cent of their portfolio in the US just because there were more opportunities on the rise. However, they have been trying for years to diversify into the East,” Diego Lopez, founder and managing director of Global SWF, was quoted in a report. “We have seen increased activity in both China and India. In the past 12 months, I think in China in particular, GCC funds have deployed $9.5 billion into investments across asset classes and industries.”

Royal Private Offices (RPOs) have been growing, especially in the UAE. Global SWF has identified 35 major GCC RPOs that currently manage $500 billion in investments

GCC state-owned investors use part of the additional inflows to make strategic investments in advanced and emerging market economies across the Americas, Europe and Asia. The sovereign funds reached their highest levels of global deal-making in about 15 years, in the first half of 2024, deploying $38.2 billion across 58 different deals, according to Global SWF.

The wave of dealmaking by the Gulf sovereign investors began with the outbreak of the Covid-19 pandemic.

Saudi Arabia’s PIF remained the most active sovereign fund in the world in the first six months of the year, fuelled by government asset transfers. Saudi Arabia’s $925 billion sovereign fund and private equity group Ardian agreed to acquire a 22.6 per cent and 15 per cent, respectively, stake in London Heathrow Airport for $4.3 billion. QIA currently owns a 20 per cent stake in the UK hub.

PIF also agreed to take a 49 per cent stake in Rocco Forte Hotels last December. The luxury hotel chain operates in Italy, Britain, Germany, Belgium and Russia.