Why the US proved fertile ground for Gulf sovereign wealth investment in 2020

  • Date: 25-Jan-2021
  • Source: Arabian Business
  • Sector:Economy
  • Country:Gulf
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Why the US proved fertile ground for Gulf sovereign wealth investment in 2020

Investment from Gulf sovereign wealth funds reached record levels in 2020 as a result of low oil prices and a need to diversify economies with non-oil assets, according to analysts.

According to statistics released by the US-based Sovereign Wealth Fund Institute (SWFI), Middle Eastern sovereign wealth funds directly invested $14.7 billion in the US in 2020, compared to $6.5 billion in 2019 and $6.2 billion in 2018.

The bulk of the investment, the SWFI noted, came from Saudi Arabia's Public Investment Fund, which invested in discounted US blue chip equities.

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The Abu Dhabi Investment Authority and the Kuwait Investment Authority, for their part, allocated “significant” amounts of capital to third-party investors, opting for direct investments in real estate, infrastructure and select private equity opportunities.

In an interview with Arabian Business, Mohamed Soliman, a senior associate at McLarty Associates' Middle East and North Africa practice, said that “since the 2014 oil price crash, the oil-exporting nations in the Arabian Gulf understood that the low oil prices might become the new norm.”

“As a result, pivoting away from the oil-empowered economies to more diversified ones became a priority for the region,”