- Other notable cities include Beijing, Singapore, Riyadh and Hong Kong, collectively representing two−thirds of the global SWF capital amounting to $12.5tr as of October 2024.
- GCC stands on the cusp of transformative economic developments that will shape the contours of global finance in the years to come.
ABU DHABI: Abu Dhabi has recently been recognised as the world’s richest city in terms of capital managed by its sovereign wealth funds (SWFs), boasting an impressive $1.7 trillion as of October 2024, according to Global SWF.
The significant figure includes the resources of prominent entities such as the Abu Dhabi Investment Authority (ADIA), Mubadala, and the Abu Dhabi Fund for Development, among others. As a result, Abu Dhabi has earned the prestigious title of “Capital of Capital,” reflecting its unparalleled economic stature and strategic financial management.
Global SWF estimates Abu Dhabi’s public capital at $2.3 trillion and project it to reach $3.4 trillion by 2030.
In comparison, Oslo ranks second with the Government Pension Fund managing over $ 1.6 trillion. Other notable cities include Beijing, Singapore, Riyadh, and Hong Kong, collectively representing two−thirds of the global SWF capital amounting to $12.5 trillion as of October 2024.
Three key players
Notably, Abu Dhabi also leads in human capital, employing 3,107 personnel within its SWFs, further emphasising the city’s commitment to investment and financial expertise.
The SWF landscape in the Gulf Cooperation Council (GCC) is dominated by three historic players: Kuwait’s KIA, Abu Dhabi’s ADIA, and Saudi Arabia’s PIF.
Nonetheless, the region is witnessing the emergence of new funds, reflecting a dynamic investment environment. The influx of foreign investors and the active participation of global managers in regional conferences have underscored the GCC’s significance as a hub for capital management.
In 2023, the SWFs in the GCC achieved a historical peak of $4.1 trillion in assets under management (AUM), marking a sustained growth trajectory. The combined efforts of the “Oil Five”—ADIA, Mubadala, ADQ, PIF, and Qatar’s QIA—contributed significantly to the total investment activity of $82.3 billion during the year.
The growing prominence of Gulf SWFs is expected to continue, with projections estimating their total assets could reach $11.2 trillion by 2030 when including broader financial entities in the MENA region.
In the Gulf region, various funds exhibited distinct investment behaviours influenced by their respective strategic objectives and regional contexts.
Kuwait’s Kuwait Investment Authority (KIA) and Dubai’s Investment Corporation of Dubai (ICD) demonstrate a preference for investing through third-party funds, effectively leveraging external expertise while minimising direct involvement.
In contrast, Abu Dhabi’s Abu Dhabi Investment Authority (ADIA) champions co-investments, coordinating with other investors to tap into lucrative opportunities. Additionally, Qatar’s Qatar Investment Authority (QIA) and Saudi Arabia’s Public Investment Fund (PIF) typically pursue solo strategies in private equity, with PIF focusing on directly investing in sectors that are strategically vital to Saudi Arabia’s economy.
This includes diverse investments in football clubs, tourism, gaming, construction, and heavy industry. Similarly, QIA has engaged in both early-stage and mature direct investment opportunities, highlighting a preference for hands-on engagement in its investment strategy.
Contrasting these investment approaches is Mubadala Investment Company’s notable activity in divestitures, with a staggering $122.7 billion sold between 2018 and 2022, nearly matching its investment volume during the same period.
Rosy outlook
These divestments primarily originated from legacy assets held by the International Petroleum Investment Company (IPIC) and the Abu Dhabi Investment Company (ADIC), including significant stakes in well-known entities. This trend underscores an adaptive strategy that balances between investment portfolio enhancement and strategic exits, which are integral to maintaining liquidity and optimising returns.
Looking ahead to 2024, the Gulf region is poised for further transformative developments, notably with the anticipated establishment of Dubai’s new SWF, the Dubai Investment Fund (DIF).
This formation is expected to create waves across the sector, likely attracting talent from existing SWFs and sparking considerable market activity reminiscent of the Abu Dhabi Quasi Fund (ADQ) launch. Furthermore, impending leadership changes among some of the region’s SWFs may catalyze shifts in investment philosophies and priorities.
Forecasts indicate a robust growth trajectory for global SWFs, projected to escalate from $11.2 trillion in 2023 to $12.7 trillion by 2025, and reaching $18 trillion by 2030. The expansion serves as a testament to the evolving landscape of sovereign investment and the pivotal role Gulf region funds will continue to play in shaping global economic trends.
