GCC Sovereign Wealth Funds Sign Deals

Sovereign wealth funds (SWFs) across the GCC signed off US$55 billion across 126 transactions in the first nine months of 2024, accounting for 40 per cent of global deals, a new report showed.

US-based organization Global SWF, which monitors the activities of these bodies, identified the region’s ‘Oil Five’ – Abu Dhabi’s ADIA, ADQ and Mubadala, along with Saudi Arabia’s Public Investment Fund and Qatar Investment Authority – as leading this robust investment wave.

Currently managing US$4.9 trillion in assets, GCC sovereign wealth funds are projected to surpass US$5 trillion by early 2025 and could reach US$7 trillion by 2030, the report said.

Additionally, central banks in the region are seeing significant increases in foreign reserves that may be funneled into these funds.

Traditional markets, such as the US and the UK, remain primary targets for GCC investments, attracting US$18.9 billion and US$9.5 billion, respectively, over the past year.

China is rapidly rising in prominence, drawing US$9.5 billion from GCC investors during the same timeframe.

GCC SWFs have rapidly ascended as dominant players on the global investment stage, capitalizing on a unique mix of high oil revenues, strategic reforms and market-savvy investment approaches.

Elevated oil prices in recent years have bolstered these funds, allowing them to expand organically – through robust market performance – and through governments channeling excess capital and state-owned assets into SWFs.

Additionally, low debt levels across GCC governments mean they can issue debt selectively, safeguarding fiscal sustainability even when oil prices dip.

Tax reforms, like VAT and corporate levies, further contribute to a more resilient financial foundation, fortifying regional economies against volatility.

A deepening focus on diversifying revenue sources also fosters resilience, seen through investments in sectors including technology, infrastructure and renewables.

Adding to this is the expansion of GCC financial markets, now home to seven active stock exchanges and more than 877 listed companies with a combined market capitalisation of US$4.3 trillion.

Altogether, these factors position GCC sovereign investors as influential, stable forces capable of shaping financial landscapes both regionally and globally.

Global SWF noted that GCC sovereign wealth funds hold a unique geopolitical edge, maintaining solid relationships with both Western and Eastern powers, which enhances their strategic agility in global investments.

Furthermore, these funds command substantial influence domestically, controlling 70pc of equity markets within the GCC – a clear testament to their significant impact on both local economies and international financial landscapes.

Saudi Arabia is intensifying its focus on domestic investment, with the kingdom’s PIF driving major growth in local projects.

The fund’s assets surged 29pc to reach US$765.2 billion in 2023, largely through directing money into Saudi infrastructure and real estate, which grew 15pc to 233bn riyals.

PIF’s assets are expected to exceed US$1 trillion by 2025, making it a global heavyweight.

The report said that Saudi Arabia stands out as the largest economy in the GCC, contributing half of the region’s US$2.2 trillion activity. By 2029, the kingdom’s GDP is expected to hit US$1.43 trillion, making up 51pc of the GCC’s projected GDP of US$2.8 trillion.

This growth is being driven by non-hydrocarbon sectors, reflecting Saudi Arabia’s ambitious Vision 2030 plan aimed at reducing its reliance on oil and gas while boosting sectors like tourism, entertainment, and renewable energy.