Sovereign wealth funds' direct investments almost doubled in 2020 to $65.9 billion, as the COVID-19 crisis saw funds deploy huge amounts of dry powder.
The International Forum of Sovereign Wealth Funds said in its annual review Tuesday that funds' publicly disclosed direct investments were up from $35.9 billion in 2019.
Investments were composed of equity — both public and private — at $48.6 billion in 2020, up from $22.2 billion in 2019; $8.2 billion in infrastructure investments, up from $4.7 billion last year; and real estate, steady at $9.1 billion.
Sovereign wealth funds — particularly those with a strategic or development mandate — pushed their "domestic agenda" in 2020, with some producing COVID-19 vaccines and others supporting their local sectors such as retail or airlines, Enrico Soddu, head of data and analytics at the IFSWF, said on a call to discuss the review.
Wealth funds were in "complete derisk mode" in 2019, but in 2020 "were able to redeploy all the cash they accumulated in 2019," Mr. Soddu said.
The majority of this cash was invested in public assets, Mr. Soddu said, which jumped to $28.4 billion in 2020 from $6 billion last year. "This is easy to explain with the opportunistic investments ... particularly from the Saudi Public Investment Fund, but also Mubadala" in Abu Dhabi. He cited Singapore's Temasek, which had S$306 billion ($214.6 billion) in assets as of March 31, 2020, providing support for Singapore Airlines.
However, Mr. Soddu does not expect to see increased public investments continue. "This is probably just an effect of the pandemic, so (it) is difficult to see this happening again in 2021," he said.
Climate change was another trend in 2020, with a "huge rise in investments touching on climate opportunities" and "record investments in renewable energy, particularly in wind and solar, but also (in) the agritech sector," Mr. Soddu noted.
Wealth funds made 23 investments in climate change-related opportunities, at a deal value of $2.5 billion in 2020, up from $1.1 billion in 2019, the review said. Renewables investments grew to $1.9 billion in 2020, up from $1 billion in 2019; while agritech investments increased almost fivefold to $512 million in 2020, up from $102 million in 2019.