Sovereign Wealth Fund M&A Volume Stayed Strong in 2020

Posted on 03/23/2021


With around US$ 8.3 trillion in assets under management and growing, sovereign wealth funds continue to play a prevailing force in the world of private equity and markets. Despite the COVID-19 pandemic and the lockdowns associated to attempt to contain the spread, large sovereign investors were relentless in pursuing opportunities in private markets.

In 2020, SWFI recorded 294 private market investments totaling US$ 77.16 billion vs. 301 investments for US$ 74.73 billion in 2019. In SWFI’s analysis, fund commitments and open market transactions were excluded. However, it is important to peel out some of the “domestic bailouts or support” during COVID. Examples of this include Temasek’s Singapore Airlines investment and Turkey Wealth Fund and its investment in local financial institutions like Ziraat Bank and Halk Bank.

Sovereigns funds found hope and promise in the East. In 2020, the Abu Dhabi Investment Authority (ADIA) and Saudi Arabia’s Public Investment Fund (PIF) both invested in Reliance Retail Ventures, a subsidiary of Reliance Industries.

Niche

Asian SWFs discovered opportunities in real estate niches like data centers and self-storage. In 2020, Singapore’s GIC Private Limited, along with Bill Gates’ Cascade Investment, LLC became investors in Columbia, Missouri-based StorageMart. The transaction valued StorageMart at an enterprise value of approximately US$ 2.7 billion.

Sovereign funds aggressively pursued both growth equity and venture capital. In 2020, Alphabet’s self-driving company unit Waymo LLC disclosed its first external investment round, led by Silver Lake, Canada Pension Plan Investment Board (CPPIB), and Mubadala Investment Company. Additional investors in this initial US$ 2.25 billion close include Magna International, Andreessen Horowitz, and AutoNation, as well as Alphabet. AutoNation disclosed that it invested US$ 50 million in Waymo.

As the price of oil creeps up, Gulf sovereign wealth funds may have more firepower, while other SWFs may seek to decarbonize their portfolios.

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