Sovereign wealth funds boosted venture capital exposure in 2018 and favored private health-care companies, according to report from the International Forum of Sovereign Wealth Funds published Thursday.
In 2018, state-owned investment funds completed 27 transactions at the growth-capital stage, up 42% vs. 2017. The largest funds also doubled exposure to early stage investments, bringing the number of deals up to 19. Private health-care company deals totaled 40 in 2018 vs. 21 in 2017.
The forum's annual report showed sovereign investment funds provided the most equity financing for private technology companies in 2018 since 2015, at $3.4 billion for 44 deals. In 2018, sovereign wealth funds overall completed 66 deals compared with 31 in 2017.
However, SWFs completed fewer direct equity investments in 2018 than they did in 2017 — 224 vs. 234 — on concerns over asset prices and even greater competition in private markets. Investments declined to $23.4 billion from $29.2 billion, a year earlier.
"This review is a new effort to improve public understanding of sovereign wealth funds," said Duncan Bonfield, CEO of the IFSWF, in a news release. "As these funds increasingly look to invest directly through their own investment teams, our data is intended to shine a light on their asset allocation trends, and to clarify many of the misconceptions about what these funds are and how they invest."
The forum's report noted state-owned funds, including Singapore's $350 billion GIC and S$308 billion ($226 billion) Temasek Holdings; Malaysia's 136 billion ringgit ($33 billion) Khazanah Nasional; Abu Dhabi's 465.5 billion UAE dirham ($126.7 billion) Mubadala Investment Co.; and the $320 billion Qatar Investment Authority have set up offices or subsidiaries in Silicon Valley to invest directly.
