Gulf-based sovereign wealth funds bet big on the United States during 2020 despite prolonged low oil prices and coronavirus lockdowns, according to new figures.
The Sovereign Wealth Fund Institute (SWFI) said 2020 recorded the largest direct investments by Middle Eastern sovereign funds in the US.
Last year, regional sovereign wealth funds directly invested $14.7 billion in the US versus $6.5 billion in 2019 and $6.2 billion in 2018.
According to the SWFI figures, Saudi Arabia’s Public Investment Fund (PIF) led the American investment charge in recent years.
“PIF made sizable bets, scooping up discounted US and European blue chip equities when the coronavirus hit hard and earning profits when share prices rebounded,” it said.
The SWFI added that the Abu Dhabi Investment Authority (ADIA) and Qatar Investment Authority (QIA) fluctuated in their direct US investments throughout the decade, especially after getting the sour taste of bailing out too-big-to-fail banks during the global financial crisis.
ADIA and the Kuwait Investment Authority (KIA) allocated significant amounts of capital to third-party investors, opting for direct investments in real estate, infrastructure, and select private equity opportunities.
Kuwait Investment Authority (KIA) allocated significant amounts of capital to third-party investors
The figures also showed that the financial sector direct investments have never fully recovered since the global financial crisis as a winning percentage of total direct investments in the US by GCC sovereign wealth funds.
“Even in adverse oil market scenarios, the large GCC sovereign funds see the US as a favoured destination, while deciding to cherry-pick among the European nations,” it added in a posting on its website.
Middle Eastern sovereign wealth funds have found tremendous opportunity in the US time and time again. Excluding countries like Iran and Turkey, sovereign investors have allocated tons of capital to US money managers, participated in urban real estate developments, and co-invested in deals taking US companies private.
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