Sovereign wealth funds have been much slower to pursue merger and acquisition deals so far this year after a bumper 2013, according to Thomson Reuters data.
Sovereign wealth funds (SWFs), which invest windfall revenues from oil and other exports for future generations, sealed $155 million of M&A deals in publicly listed markets up to March 10, less than a tenth of the value for the same year-ago period.
In the same period last year, they made 20 deals worth $2.7 billion.
In the whole of 2013, sovereign funds sealed M&A deals worth $36.5 billion, their highest since 2010. That was still half of the boom year of 2007, when SWFs made deals worth $73 billion.
State-owned wealth funds have been shying away from making headline-grabbing M&A deals since they came under severe domestic pressure after losing an estimated $80 billion at the height of the financial crisis by investing in beleaguered Western banks.
Some funds like Qatar and Norway have been active in making property and infrastructure investments, which are less liquid than equity or debt markets but deliver stable income with a relatively attractive yield.
Oeystein Olsen, governor of Norway's central bank which manages the SWF, told Reuters last month the fund could expand investments in real estate, infrastructure or new asset classes .
Qatar Investment Authority is in talks to invest $200 million in residential property in India, according to a source .
Azerbaijan's $36 billion sovereign wealth fund is planning to buy real estate in Asia this year in order to further diversify its assets.
"Until recently we were very conservative fixed income investors. But we've started investing in riskier assets, private equity and real estate," the fund's chief executive Shahmar Movsumov told a conference last month.
Some sovereign wealth funds may be increasingly forced to keep more windfall income in liquid assets in order to aid their economies, rather than locked up in long-term investments .For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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