Dealmaking at Sovereign Wealth Funds Grows Despite Macro and Geopolitical Risks

Posted on 05/07/2022

For 2022, private direct deals made by sovereign wealth funds continue to increase, according to transaction data from the Sovereign Wealth Fund Institute (SWFI). However, private cross-border deals remain leveled as domestic and regional direct investment continues to grow. In addition, direct deals including public stock purchases were higher in amounts during the “buy the dip” plays made by some sovereign funds during the COVID-19 pandemic. A number of sovereign investors have positioned their deal-making teams to target inflation-resistance assets for 2022. For example, from the start of 2020 till March 31, 2022, sovereign investors directly invested US$ 5.447 billion in the data center industry, according to SWFI transaction data. Some SWFs directed their fixed income portfolios to increase investment in TIPS, while attempting to lower exposure in U.S. Treasuries.

Direct Deals by Sovereign Wealth Funds by Quarter

Billions USD

Source: Sovereign Wealth Fund Institute (SWFI) Filter: BuyerType: Sovereign Wealth Fund. AnnouncedAt. Deals and New Security Issues only.

The Sovereign Wealth Fund Institute tracks investment activity of sovereign wealth funds, pensions, endowments, and other institutional investors globally. For this analysis, SWFI is excluding fund commitments, fund platforms, and open market transactions as direct deals tend to show an investor’s conviction in a particular theme. In the first quarter of 2022, sovereign wealth funds invested a total of US$ 26.995 billion in 107 private deals, up from US$ 20.439 billion in deal amount and 120 deals in the first quarter of 2021. In the first quarter of 2021, real estate and energy investments by sovereign wealth funds were the top choices compared to real estate and healthcare in the first quarter of 2022. It is important to note that most of the healthcare transactions in the 2022 early period were before the Russian invasion of the Ukraine.

Healthcare Investments

Some notable first quarter 2022 sovereign investor deals in the healthcare sector include Abu Dhabi Investment Authority’s investment in AmeriVet Veterinary Partners, a consolidator of veterinary practices. Singapore’s GIC Private Limited and ADIA participated as co-investors in Athenahealth.

Sovereign funds continued to invest in data centers and data center developments. GIC parked money with Equinix to build and operate two xScale data centers in Seoul. A major deal in this period is Singapore’s Temasek Holdings deal to buy Element Materials Technology Limited. Qatar Investment Authority (QIA) committed capital to Bodhi Tree, a company originated from James Murdoch, a son of Rupert Murdoch of News Corporation. QIA was later found to be backing investor of Elon Musk’s buyout of Twitter Inc.

Another interesting deal in the data space is private equity firm Warburg Pincus and Mubadala Investment Company buying Pharma Intelligence, a provider of specialist intelligence, data, and software for clinical trials, drug development, and regulatory compliance, from Informa PLC.

Sovereign wealth funds, especially oil-based investors, are flushed with more cash after years of conservative inflows. Sovereign wealth funds are poised to make inroads, while traditional investors decrease their appetite for risk and cut losses.

Get News, People, and Transactions, Delivered to Your Inbox