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SWFs Double Direct Investment During COVID-19 Crisis

Research reveals that as well as supporting their governments  these long-term investors redoubled their focus on climate change and other secular trends in 2020.

London, 11 May 2021 – Today, the International Forum of Sovereign Wealth Funds (IFSWF), a global network of sovereign wealth funds from nearly 40 countries, has released its annual review of sovereign wealth fund investments in 2020, titled Continuity in the Face of Upheaval. The full report is available here.

The annual review draws on IFSWF’s comprehensive proprietary database of sovereign wealth funds direct equity investments since 2015. It reveals that sovereign wealth funds saw a myriad of opportunities in the market dislocations of the COVID-19 pandemic. 2020 was a bumper year for deploying capital, with publicly disclosed direct investments almost doubling year-on-year to $65.9 billion, up from $35.9 billion in 2019 in sectors such as renewable energy, food production, e-commerce and logistics.

The report identifies three key themes in sovereign wealth fund investments in 2020:

  1. The COVID-19 Response. Many sovereign wealth funds were called on to support their government’s response to the pandemic. As a result, funds with a mandate to invest domestically invested more than those investing in international financial markets for the first time.
  2. Climate Opportunities. 2020 was the year that sovereign wealth funds engagement with the climate agenda started to come of age. In 2020, sovereign wealth funds made 23 investments valued at over $2 billion in climate-change-related sectors, such as agritech, forestry and renewable energy, a four-fold increase from 2016.
  3. Committing to Long-Term Trends. Sovereign wealth funds have multi-year investment horizons. Consequently, we observed substantial deployment of capital into sectors we had previously identified as key investment themes, such as e-commerce and logistics.

Duncan Bonfield, IFSWF Chief Executive, said, “The COVID-19 pandemic presented all investors with enormous challenges. Our data reveals that sovereign wealth funds stuck to their investment strategies and deployed capital in a financially motivated manner in line with their mandates. As long-term investors, sovereign wealth funds are continuing to back long-term trends embracing climate-change solutions and the transition to a low-carbon economy.”

The full annual review, Continuity in the Face of Upheaval. The full report is available here.

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About the International Forum of Sovereign Wealth Funds

The International Forum of Sovereign Wealth Funds (IFSWF) is a voluntary organisation of global sovereign wealth funds committed to promoting good governance and investment management practices through dialogue, research and self-assessment. The IFSWF also seeks to promote a deeper understanding of sovereign wealth fund activity amongst government and financial services institutions.

Find out more at www.ifswf.org

Contact: Victoria Barbary, Director of Strategy & Communications, IFSWF, vb@ifswf.org

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