Sovereign wealth funds have earned outsized attention in recent years for their large, often aggressive, private equity deals. They certainly have had solid growth but are still a relatively small portion of the institutional universe, and as they increasingly focus on infrastructure, they are drawing similar attention.
The story of what is driving the growth of certain SWFs has an element of the haves and the have-nots. The United States and Europe, for example, have accumulated massive fiscal deficits in the past decade; countries on the other side of the trade have built surpluses. Whether it is from commodity exports — such as oil in the Middle East and Norway, or copper in Chile — or high domestic savings rates in countries such as China, SWFs are flush. And like much of the institutional investment world, they increasingly are targeting infrastructure assets.
“SWF [assets under management] have grown, and they need to invest that capital,” says Ashby Mon