Sovereign Wealth Funds

December 11, 2009

Sovereign Wealth Funds

Sovereign Wealth Funds Looking to Invest in Private Equity

Sovereign wealth funds, large state-owned investment vehicles, are looking to invest in buyout firms.  Sovereign wealth funds are typically a pool of wealth derived from economic surpluses or profits from a country’s natural resources, then a manager will invest those profits in various areas including alternative assets.

These pools of capital are a potential fundraising resource for private equity firms, which could make up for the lower interest from other institutional investors following the crisis.  The sovereign wealth fund industry has an eye on private equity and the funds want to deepen their relationships with the buyout world.  One way the two funds can work together is through a sort of club deal like when Singapore’s GIC invested alongside Swedish private equity firm EQT in a German publishing firm.  Sovereign wealth funds are investing in private equity firms as well:

In the same way China’s CIC took a stake in Europe’s Apax Partners [APAX.UL] as well as investing in its fund, however, these investors want special terms and first right to participate alongside buyout houses in deals, as a means of enhancing returns.

“Some sovereign wealth funds are ready to put large amounts of money to work, but they want to be considered a special investor,” said Antoine Drean, chairman of placement agent Triago.
Private equity firms, eyeing new deals as debt markets loosen, are concerned their traditional investor base of pension funds and endowments will start rowing back on commitments to fundraisings once current capital is exhausted.

“Who are the only people with deep enough pockets to take up the slack? It’s the sovereign wealth funds,” said a private equity manager, who declined to be named.

So they are courting the sovereign wealth funds and sovereign wealth funds are in a position to call the shots.  Source

To purchase a list of sovereign wealth funds and contacts within the fund, see Investor Databases

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Tags: sovereign wealth funds, sovereign wealth funds buyouts, private equity sovereign wealth funds, sovereign wealth investors, swfs, sovereign wealth funds apax, sovereign wealth funds and private equity investments

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