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Sovereign wealth funds: the Gulf’s biggest power players

By Shruthi Nair

Did you know that the world’s first sovereign wealth fund was set up in the GCC? Kuwait Investment Authority was established in 1953, eight years before the country’s independence, to invest surplus oil revenues.

Now every GCC country has a sovereign wealth fund responsible for financial returns and national economic development. 

“Today there are over 100 sovereign wealth funds holding $11 trillion worth of assets under management. Forty percent of those assets are here in the region,” said Javier Herrera, partner at Kearney. 

Four out of the world’s top 10 sovereign wealth funds are in the GCC. These government-backed investment vehicles have a set of common priority sectors in the region: manufacturing, renewables and healthcare. 

“There was no presence of local players in the automotive sector in Saudi Arabia two to three years ago. PIF took the lead role of catalysing the sector by making two anchor investments in Lucid and Ceer,” Herrera said. 

These investments started generating demand that resulted in new opportunities within the value chain. Ceer, for instance, is forecast to create up to 30,000 jobs and contribute $8 billion to the Saudi economy by 2034. 

Meanwhile in the UAE ADQ is playing a key role in advancing the healthcare sector.

“ADQ started by merging two key players – SEHA and Daman – under Pure Health. Since then, they started making more local and international players with the aim of making ‘regional champions’,” Herrera added. 

However, the capital of sovereign wealth funds is limited, which is why they are looking for other sources. 

To find out what these sources are and understand how the region’s sovereign wealth funds function, watch the full video.

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