What is a Strategic Development Sovereign Wealth Fund (SDSWF)?
Strategic Development Sovereign Wealth Fund (SDSWF) – It is a sovereign wealth fund that can be utilized to promote national economic or development goals.
It is commonly accepted that most sovereign funds have a commercial objective which is to earn a positive risk-adjusted return on their pool of assets. There are some SWFs known to promote national economic or development goals.
Common Scenarios (SDSWF)
Domestic Stabilizer Scenario
SWF invests in domestic asset(s) or domestic firm(s) to stabilize aggregate asset pricing, create domestic jobs, and/or prevent entity insolvency.
Industry Job Creator Scenario
SWF acquires a direct stake or total control of Firm A. Firm A owns proprietary technology, controls a unique process, or has access to materials. Firm A opens a factory, sets up an operation, creates a subsidiary or JV, or research facility in SWF home country. This enables strategic knowledge transfer to the SWF home country, while providing potential employment opportunities for the SWF home population.
Country – Corporate Alliance Scenario
SWF signs a memorandum of understanding (MoU) with Country A. Select companies domiciled in Country A receive direct investment from SWF, while those companies sell to the SWF home country government. Those companies may also set up operations in the SWF home country.
Resource Transfer Scenario
SWF acquires a direct stake or total control of Firm A. Firm A controls resources in which SWF home country needs for economic or development purposes.
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