GIC chief executive officer Lim Chow Kiat held onto Singapore’s cash more tightly last year
After five consecutive years of leading investment by state-owned funds globally, Singapore’s GIC and Temasek Holdings both cut their commitments by more than half last year, with the pair combining to deploy $26.2 billion of fresh capital last year.
That total was less than half of the $53 billion that the two spent in 2022, according to rankings published this week by sovereign wealth fund site Global SWF. Spending by GIC plunged by 51 percent in 2023 to $19.9 billion from $40.3 billion a year earlier, as the sovereign fund lost the top spot as the world’s most active state-owned investor for the first time since 2017, to move into second place.
Temasek cut its investments to $6.3 billion in 2023 from $13.5 billion a year earlier, ranking it seventh on the same list, after having seized the fourth spot in 2022. Helped by rising oil prices, Saudi Arabia’s Public Investment Fund (PIF) claimed the paramount position as the world’s most active sovereign investor last year with $31.6 billion in capital deployed, which was up 53 percent from the $20.7 billion it invested a year earlier..
“We saw a fair degree of market volatility and distress in 2023, and sovereign investors continue to operate cautiously,” Global SWF said in its report released on Monday. “Gulf SWFs have increased their domination of the global transaction activity, to the detriment of Singaporean and Canadian funds.”
Turning to Emerging Markets
GIC’s capital deployment in 2023 was the fund’s lowest since the $17.7 billion it spent during the pandemic in 2020, while Temasek’s commitments last year were the organisation’s lowest since 2017.
Temasek Holdings chairman Lim Boon Heng
With assets in core markets under pressure last year and opportunities to use leverage more limited, GIC nearly tripled its investments in developing markets compared to 2022. Among the fund’s major deals was a joint venture with Brookfield India REIT which acquired a pair of India commercial buildings valued at around $1.4 billion in May.
Temasek also leaned into emerging markets last year, particularly in India where its Mapletree Investment unit formed a C$2.5 billion (then $1.86 billion) office joint venture with Canada’s Ivanhoe Cambridge in February.
Top Five Reshuffled
In 2023 sovereign wealth funds deployed a combined $124.7 billion globally in 2023, which was down 20 percent year on year, while public pension funds cut their investments 26 percent to $80.4 billion during the same period.
In addition to Saudi Arabia’s PIF jumping to the top spot, Abu Dhabi’s Mubadala Investment Company rose to the third position with $17.5 billion capital deployed last year from the sixth spot in 2022. The Abu Dhabi Investment Authority dropped from second to fourth place with $13.2 billion in investments in 2023.
Canada Pension Plan Investment Board stayed in fifth place after deploying $9.4 billion last year.
In terms of assets under management, state-owned investors benefited from a rebound in financial markets and high oil prices in 2023, with the combined AUM of sovereign wealth funds rising by 7 percent from the year prior to reach $11.2 trillion at the end of last year. Public pension funds grew their AUM by 3.6 percent to $23.1 trillion during the same period.
With AUM estimated at $769 billion at the end of 2023 GIC ranked sixth among sovereign wealth funds globally, while Temasek was 10th with $288 billion.
At $1.4 trillion in AUM, Norway’s Norges Bank Investment Management remained the world’s largest sovereign wealth fund, while China Investment Corporation led Asia with $1.24 trillion.
Global SWF predicts GIC will become the seventh largest sovereign investor in the world with a projected AUM of $1.24 trillion by 2030.
Data Centres in Focus
In terms of value, direct real estate investments by state-owned investors (SOI) fell by 40 percent to $32.8 billion last year compared to $54.4 billion in 2022.
Despite the cutback in cash, state-owned investors last year raised the proportion of their commitments which went into real estate assets for the first time since 2014, the report showed, with 26 percent of fresh capital going to the property sector, which was up from 20 percent in 2022.
Among property plays favoured by state-owned investors last year, capital deployed into data centres jumped 150 percent to a record $7.6 billion globally, including a $2 billion joint venture which India’s National Investment and Infrastructure Fund formed with Singapore-based operators Digital Edge and AGP Sustainable Real Assets in January 2023.
Investments in hotels also rose by 8 percent to $4.7 billion last year, led by GIC’s purchase of a minority stake in Spanish hotel group Hotel Investment Partners in October.