Sovereign wealth fund investment deals fell more than one-third in 2022 in the face of increasing uncertainty, according to the IFSWF's annual review for 2022 released Wednesday.
Investing in Uncertain Times is based on an International Forum of Sovereign Wealth Funds proprietary database of sovereign wealth funds' direct equity investments since 2015.
While the total annual value of publicly disclosed direct investments declined by only 3.8% to $71.3 billion in 2022, the number of deals fell by more than a third to 306 from 468 in 2021, which saw record highs.
"Although most economies re-opened in 2022 after the COVID-19 pandemic, Russia's invasion of Ukraine shaped the investment environment and turned it upside down," the review said.
Between moves in Europe to reduce reliance on Russian gas, inflation in emerging markets, supply chain disruptions and continued pandemic restrictions in China, "the investment environment of 2022 was more uncertain than early 2020's extreme volatility and the most turbulent since the global financial crisis of 2008," the review said.
Over the past five years, sovereign wealth fund investment in infrastructure spiked, particularly in developed markets, as sovereign wealth funds sought to diversify portfolios and achieve long-term returns, the review said. In 2022, direct investments in infrastructure represented 25% of total investments, up from 13% in 2018, growing to more than $17 billion, up from $6 billion over the five years.
Direct investments at the late stage of capital raising and pre-IPO and IPO were down, while in the tech sector, sovereign wealth funds continued seeking innovative companies in the venture capital space. Investments in young companies accounted for nearly one-third of direct investments, growing to 133 investments valued at $5.7 billion in 2021, up from 19 valued at $500 million in 2015, the review said.
