Saudi Arabia's PIF at forefront as Gulf SWFs approach $18tn by 2030

23/03/2025 14:51 AST

Saudi Arabia's sovereign wealth fund and five of its regional counterparts are on track to control $18 trillion in assets by 2030, marking a 50 percent surge from the end of 2024, according to an analysis.

In its latest report, Deloitte Middle East noted that the region, home to six of the world's 10 largest sovereign funds, now holds approximately 40 percent of global SWF assets - solidifying its position as a dominant force in the market.

The study aligns with the latest report from the Sovereign Wealth Fund Institute, which ranks Saudi Arabia's Public Investment Fund sixth globally, managing $925 billion. The Abu Dhabi Investment Authority leads the Gulf with $1.05 trillion, followed by the Kuwait Investment Authority at $1.02 trillion and the Qatar Investment Authority with $526 billion.

Julie Kassab, sovereign wealth fund leader at Deloitte Middle East, said: "The Gulf region continues to be the epicenter of sovereign wealth fund activity, with its major players driving innovation in investment strategies and operational excellence."

She added: "We are witnessing these funds not only expand their geographical footprint but also significantly enhance their internal capabilities, setting new standards for the industry in terms of performance and governance."

The report also highlighted that Gulf SWFs maintained an "aggressive investment pace," deploying $82 billion in 2023 and an additional $55 billion in the first nine months of 2024.

Deloitte listed five major players shaping the region's investment landscape: Saudi Arabia's PIF, ADIA, Abu Dhabi's Mubadala, Abu Dhabi Developmental Holding Co., and QIA.

Globally, the total number of sovereign wealth funds has nearly tripled since 2000, reaching approximately 160-170 funds, with 13 new ones established between 2020 and 2023.

Asia takes center stage
Deloitte's analysis highlights key trends reshaping the regional SWF landscape, with funds increasingly focusing on fast-growing countries outside traditional Western markets.

The report revealed that Gulf SWFs strategically prioritize Asia, with many establishing new offices throughout the Asia-Pacific region and significantly increasing allocations to high-growth economies, including China and India.

Wealth funds in the Gulf region were particularly active in China, investing approximately $9.5 billion in the Asian giant during the first nine months of 2024.

Abu Dhabi Investment Authority and Kuwait Investment Authority ranked among the top 10 shareholders in Chinese A-share listed firms.

"This represents a strategic opportunity as Western investors reduce their exposure, allowing Middle Eastern funds to leverage their strong political and trade relationships with Beijing," Deloitte noted.

The report added that Gulf wealth funds are also eyeing Africa, particularly the mining industry, for new opportunities.

This year, the UAE and Saudi Arabia have shown a willingness to invest in high-risk extractive ventures in Africa, both directly and through stakes in multinational mining companies.

This shift coincides with the rise of new investment vehicles, particularly "Royal Private Offices," which now control an estimated $500 billion in assets.

Combating challenges
Wealth funds in the Gulf region are under increasing pressure to sharpen their competitive edge, focusing on internal performance, risk oversight, and investment management to deliver stronger returns, the analysis stated.

The report noted that many regional wealth funds are becoming more proactive - showing greater openness to divestment, demanding better reporting from portfolio companies, and exerting more influence at the board level.

The study added that this drive for excellence has intensified competition for human capital among these funds, with soaring demand for experienced national talent.

"Gulf SWFs now employ an estimated 9,000 professionals across their operations. Gulf funds are offering increasingly attractive packages to senior professionals, particularly those with experience at established funds like Singapore's Temasek or Canada's Maple Eight," Deloitte stated.

The consulting firm added that Gulf governments are also reassessing their approach to strategic assets. This has led to the creation of new, domestically focused funds designed to co-invest alongside international partners rather than compete directly with established regional players.

It concluded: "Looking ahead, while geopolitical uncertainties and potential commodity price fluctuations may create headwinds, these pressures could drive greater efficiency and innovation in fund management practices."

Arab News