Behemoth state-owned investors were active dealmakers in 2021 — but none were busier than Singapore’s GIC.
According to a new report from data provider Global SWF, sovereign wealth funds completed 854 deals in 2021, totaling $219 billion in value.
The report revealed that this is the highest amount of money put to work by state-owned investors in the past six years, and 19 percent more than in 2020. State-owned investors were also active on the other side of deals, selling $32.1 billion across 45 transactions, half of which were properties and infrastructure assets.
But no fund was more active than Singapore’s GIC in 2021, which invested $34.5 billion in 110 deals. GIC nearly doubled its investments when compared to 2020, according to the report.
Nearly half of these deals were in real estate, particularly logistics-focused companies. In fact, the sovereign wealth fund spent $9.1 billion on three logistics properties, according to the report.
The Canada Pension Plan Investments Board deployed the second-most amount of capital — US$23.7 billion — and placed a significant focus on real assets as well. Abu Dhabi’s Mubadala Investment Company ranked third among dealmakers, deploying $14.5 billion, while Caisse de dépôt et placement du Québec ranked fourth, deploying $14.4 billion.
While the top dealmakers paid special attention to real assets in 2021, the asset class represented a smaller portion of transactions in 2021, declining from half of all deals in 2016 to a third of the total. The healthcare, retail, and technology sectors, however, saw a pickup, driven by venture capital investments.
Venture capital saw the biggest jump in investments by sovereign wealth funds for the year. Investments in the asset class soared 81 percent year-over-year, with a record $18.2 percent invested across 328 deals.
“While VC remains a small slice of [state owned investors’] overall portfolios, allocations provide them with exposure to market disruptors with high growth potential,” the report said. “Valuations are at all-time highs encouraged by a fast pace of exits and strong liquidity potential, including IPOs and SPACs.”
Singapore’s Temasek spent the most on venture capital for the year, a total of $5.1 billion. This was well above the amount top dealmakers GIC and CPP invested in venture capital in 2021.
State-owned investors are primarily focused on growth and late-stage venture investments, investing more than $3 billion in pre-IPOs in 2021.
“This should not be seen as undue intensity in mature, large VC-backed enterprises, but as desire to back start-ups through the company lifecycle to IPO stage,” the report said.
Interest in early-stage, series A deals, though, fell in 2021, down 24 percent from the prior year. According to the report, this downward trend began before the onset of the COVID-19 pandemic.
Moving forward, Global SWF expects venture to continue to capture an increased portion of investable capital, and expects private credit to do the same.
And there will be plenty of capital to go around — the report predicts that by 2030, sovereign wealth funds will manage a total of $17.7 trillion globally, up from $10.5 trillion in 2021.