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SWFs double direct investments to $65.9bn in 2020 during the Covid-19 global pandemic

Wednesday, May 12, 2021

Laxman Pai, Opalesque Asia:

Sovereign wealth funds' direct investments almost doubled to $65.9 billion in 2020, up from $35.9 billion in 2019, as the COVID-19 crisis saw funds deploy huge amounts of dry powder, said a study.

According to the latest annual review by the International Forum of Sovereign Wealth Funds (IFSWF), whose membership includes sovereign vehicles in nearly 40 countries, SWFs were more focused on sectors such as renewable energy, food production, e-commerce, and logistics during the last year.

In 2020, as a consequence of the pandemic, sovereign funds deployed 22% of all capital towards direct investments in their local markets, as opposed to an average of approximately 13% in the previous five years.

Compared to previous years, SWFs were slightly more inclined to invest alone, perhaps as a consequence of some saving funds rescuing companies at home and some other hybrid funds taking opportunistic bets. Conversely, it seems that sovereign wealth funds are no longer making inroads in co-investing with industrial, strategic partners and peers.

Many sovereign funds were required to support domestic businesses in the pandemic's wake in 2020, the report said.

In 2020, there were only 39 transactions in strategic partnerships, a 30% drop compared to the previous year. While sovereign wealth funds invested in 19 deals with peers, in line with the low of 2019. This decline might be due to sovereign funds investing less in real estate, t......................

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