GIC slips from top spot as most active state-owned investor in 2023: report

FOR the first time in six years, Singapore’s GIC lost its top spot as the most active state-owned investor (SOI) globally in 2023, falling to second place in a list compiled by sovereign wealth fund (SWF) tracker Global SWF.

It was beaten by Saudi Arabia’s Public Investment Fund (PIF), which moved up three places from the previous year.

Likewise, Singapore’s state investment firm Temasek slipped off the top 10 list of most active SOIs for the first time since 2018, when Global SWF began tracking SOI activity.

The report, released on Monday (Jan 1), attributed the fall to its reduced investments in developed markets.

It noted that GIC had invested US$20.9 billion in 2023. Its investment activity had fallen by 36 per cent in volume, as well as 48 per cent in value, compared with 2022.

In comparison, PIF had invested US$31.5 billion in 2023 and completed 48 deals – 33 per cent more than in 2022.

The report described the Saudi Arabian institution as “a powerhouse both at home and overseas” with the aim of becoming the world’s largest sovereign wealth fund by 2030.

Together with PIF, four other investment funds from the Gulf made up half of the top 10 most active list. The funds are Abu Dhabi Investment Authority, Mubadala Investment Company, as well as Abu Dhabi Developmental Holding Company – all of which are from Abu Dhabi; and Qatar Investment Authority from Qatar.

Cautious approach by state-owned investors

In 2023, SOIs around the world invested less frequently and in reduced amounts compared with 2022.

This signalled “an overly cautious approach” by firms, the report said, as there is no shortage of capital in these institutions.

Investments by SWFs fell 21 per cent to US$123.8 billion in 2023, down from US$155.8 billion the previous year. Similarly, investments by public pension funds (PPFs) stood at US$79.6 billion, down from US$108.8 billion in 2022.

The total number of deals completed by both SWFs and PPFs also fell to 584 in 2023 from 749 in 2022.

Even as funds invested less frequently, the report noted that the average ticket size rose in 2023 with investors favouring large deals in infrastructure and energy over smaller venture capital commitments.

The recovery of financial markets and sustained high oil prices also boosted the assets under management by SWFs, with their collective value peaking at US$11.2 trillion in 2023, said Global SWF.

PPFs increased their assets to US$23.1 trillion, while central banks were almost flat at US$15.4 trillion.

“We expect the three groups (SWFs, PPFs and central banks) to reach a combined US$50 trillion once again, and pass the 2021 peak at some point in 2024 as they recognise the paper gains most institutions have enjoyed during the past 12 months,” the company said.

Growing interest in India

The regional preferences of top investors are also changing, with a renewed interest in emerging markets, especially India, which is now the second most popular investment destination after the US, the report indicated.

This was especially significant for GIC, whose investments in emerging markets in 2023 were three times as much as in 2022.

The report noted that GIC was one of the leading investors in the Indian real estate market and had signed a US$1.4 billion deal with Brookfield India Real Estate Investment Trust to build commercial offices last year.

In terms of industries, more than a quarter of investments made by SOIs in 2023 was in real estate, which the report noted was an interest “not seen since 2014”.

Hotel investment, in particular, rose 8 per cent to US$4.7 billion, the highest level since the onset of the pandemic.

The biggest transaction was GIC’s investment in Spanish hotel group Hotel Investment Partners from Blackstone for US$1.5 billion. The deal confirmed GIC’s status “as a heavyweight player in European tourism”, Global SWF said. Other industries that were popular among SOIs were financials, which took up 19 per cent of the deals, and infrastructure, which comprised 18 per cent of deals.

Co-investments have also become more popular, growing over US$30 billion for the first time in 2023. GIC, Gulf funds and Canadian funds were the most prevalent in co-investments, said Global SWF.