Sovereign Investors 2020

Sovereign investors have increasingly captured attention and exerted influence in global financial markets. Over half the Sovereign Investors have sources of capital from commodities or hydrocarbon; and despite the recent fall in prices, we expect the total assets under management to reach USD 15tn by 2020. As we look ahead to 2020 we believe five global megatrends are helping reshape the world economy and impacting Sovereign Investors.

Major role of sovereign investors in the global economy

The global economy has witnessed the emergence of a new set of key actors over the last two decades. Sovereign Wealth Funds (SWFs) and Pension Funds (PFs) – or Sovereign Investors – have become a pivotal player in global financial markets thanks to their liquidity, and continue to grow rapidly in number and in size. This group of highly heterogeneous funds has different backgrounds, structures, and missions, but shares an ultimate goal: to preserve capital and maximise the return on investments.

The influence of direct investors in infrastructure investing

It isn’t just Sovereign Investors who have joined the infrastructure investor community. See who else has the appetite for this area and explore the factors that are driving the interest.

Drilling Deeper seeking the untapped wells of prime real estate

Explore the opportunities for sovereign wealth funds who are prepared to drill deeper and further afield and how investors can be best positioned to capitalize on real estate allocations.

Secondary debt market

PwC explores European Bank Restructuring and the investment opportunity arising in the Secondary Debt Market. See the report now.

The taxonomy of Sovereign Investment Funds

The increasing influence and relevance of Sovereign Investors (SIs) is reflected in their total assets under management (AUM), which have increased more than tenfold in the last decade.

An increasingly unstable tax landscape

Across the developed world the demand for tax revenues has been increasing while in the wake of the financial crisis, tax take from traditional sources has largely decreased.

An increasingly aligned asset class

In a context of sluggish growth and scarce liquidity in the global markets, private equity continues to shine and record high levels of activity. Fundraising has remained strong given the Limited partners (LPs) overall satisfaction with distribution and returns.

Asset allocation trends of sovereign investors

The size, timeframe, high return targets and unique liquidity requirements make Sovereign Investors unique.

An ever changing relationship – SWFs and PEs

The global investment management landscape has witnessed a number of changes. Sovereign Wealth Funds (SWFs) are increasingly seen as active investors, with sophisticated governance structures and investment policies open to new markets and opportunities. At the same time, Private Equity firms (PEs) have started to gain momentum after the global economic downturn with capital calls coming back to pre-recession levels and the largest funds showing improved performance. Explore the factors that lead to successful long-term partnerships between SWFs and PEs.

Critical success factors: Underpinning the right investment strategy

To maximise potential for capital preservation and ultimately value creation, it's critical for Sovereign Funds to review and improve their investment framework on a continual basis. The key is to ensure that only the best investments are selected, that the impact of new investments for the Sovereign Fund is fully understood, and to have robust processes that are aligned to the strategic objectives of the fund.

The Real Estate equation: Bridging the divide; global to local, macro to micro

Real Estate is attracting a big proportion of global capital -- and this raises the challenge of bridging global demand with local supply, and micro environments with macroeconomics. Sovereign Wealth Funds certainly face this challenge. Explore the ways they can bridge this gap.

Successful investing: The difference between price and value

Warren Buffet is often cited as saying: “Price is what you pay. Value is what you get.” Why do buyers and sellers need to focus on the gap between market price and intrinsic value? Because that gap may decide the ultimate winners and losers in a given transaction. Explore how best practice in valuation can help mitigate the risks of mispricing a transaction and improve the odds of deal success.

Adapting to change: The global tax landscape

In the new era of economic deficits and increased demand for fiscal revenues by governments around the world, Sovereign Funds are exposed to the ever-changing and increasingly complex global tax landscape. How are Sovereign Funds managing these risks, and what other trends are impacting them?

Sovereign Funds as a stakeholder in board room pay

In a post-financial crisis world, legislators appear to want an ever increasing power and responsibility to be given to investors on board room pay. How should Sovereign Funds involve themselves in this potentially challenging and very political element of company corporate governance?

Capital Markets: The Rise of Non-Bank Infrastructure Project Finance

Capital markets' involvement in financing infrastructure projects outside of North America has reached a tipping point and will steadily increase. But there remains a great deal of uncertainty among both governments and project sponsors about how best to access the capital markets for infrastructure projects. Explore the preconditions that must exist for a project bond market to take root.