Gulf sovereign wealth funds including Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala are mobilising to buy assets whose valuations have been hit hard by the coronavirus pandemic. When I spoke to Mubadala and PIF last week, both said they are looking to invest in areas that would bounce back in a global recovery, such as healthcare, technology, entertainment and logistics.
Sovereign wealth funds – the challenges
The Gulf funds certainly have the money: Abu Dhabi Investment Authority manages $696 billion, the Investment Corporation of Dubai $239 billion, Mubadala Investment Company $232 billion, the Kuwait Investment Authority $534 billion, the Qatar Investment Authority $328 billion, and Saudi Arabia’s Public Investment Fund $320 billion.
Yet there may be problems for bankers and asset managers taking potential deals to the sovereign wealth funds. The oil price is at a 20-year low as coronavirus depresses demand, and Gulf countries may need to draw on their SWFs to support their domestic economies. Secondly, sovereign wealth funds have high visibility and there is strong competition for their attention. The queues at the doors of ADIA, the PIF, the QIA, Mubadala and others will be long.
Sovereign family offices - much less well known
Much less is known about another type of sovereign wealth fund, much smaller than their institutional big brothers but with assets still measured in the billions. They are unlikely to have a queue at their door because many bankers and asset managers don’t know where the door is.
These are the sovereign family offices, or the family offices and family investment companies belonging to members of Gulf royal families. Their fortunes may have been triggered by access to inherited sovereign wealth and subsequently increased during the oil boom periods of the seventies and eighties when landholding values accelerated rapidly and fortunes were made from burgeoning local economies. All the royal families of the Gulf countries without exception have senior members with actively investing family offices.
Sovereign family offices – foreign assets do have appeal
True, the traditional approach of many such sovereign family offices is to invest in national rather than foreign assets. But there are exceptions. Also true, the assets under management of many of them are in the range $1 billion to $3 billion, far less than the likes of Mubadala or the QIA. But they are actually quite numerous, not just one or two per country. And some of them, being owned by senior members of the ruling family, will have a degree of influence over their national sovereign wealth funds. Furthermore, the queue at their door may be manageable.
The Private Investment Group
The queues at the doors of ADIA, the PIF, Mubadala and others will be long. This is NOT the case for The Private Investment Group as we have partnerships with the majority of sovereign wealth across the GCC.
Who has a good product and wants to skip the queues?