Middle East Sovereign Funds to Recycle Petrodollars into Global Infrastructure

Posted on 10/06/2021

As natural gas and oil prices increase partially due to global inflation stemming from the massive quantitative easing COVID response from central banks and unprecedented fiscal stimulus, Middle East-based oil sovereign wealth fund coffers are filing up again. This is a sharp reversal from when oil was selling around US$ 20 per barrel. As SWF coffers fill up and mired in a low-yield world, sovereign investors from the Gulf are recycling cash into global infrastructure investments. For example, the Abu Dhabi Investment Authority (ADIA) via its Tawreed unit is an investor in the WestConnex concession in Australia. Part of infrastructure that is in demand include renewable energy infrastructure. Some sovereign investors are keen on investing in the climate change energy transition. In some instances, battery-powered renewable projects are starting to compete with fossil fuels to provide some level of on-demand power generation.

ADIA is also an investor in INA Infrastructure Investment Platform, an Indonesian infrastructure investment platform.

Not all sovereign investors plan to go direct or co-invest in infrastructure investments. Some sovereign investors continue to prefer infrastructure funds.

Middle East Sovereign Wealth Funds Direct Investments in Infrastructure and Energy

SWFI.com Query
Deal and New Security. BuyerType: Sovereign Wealth Fund. Sectors: Infrastructure and Energy. Buyer Regions: Middle East.

According to SWFI’s Global Asset Owner Survey, private infrastructure remains a key overweight metric for future asset allocation (next 12 months) for many respondents in many recent survey results.

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