Relatively that is. Amid the doom and gloom surrounding the worst start to a year for deal-making, the role of the sovereign wealth fund in global M&A is on the up. Numbers from Dealogic show that SWF investments, not including private equity investing, totalled about $25bn in the first quarter of the year, well up on last year’s $3.9bn and about half the global volume racked up by private equity investors.
We suspect that the frenzy surrounding the funds in the final quarter of 2007 and since means that their activities are now better tracked, but the growth is nevertheless impressive, with the first quarter already racking up half of last year’s total.
As deal-making globally slowed, the share of overall activity of the SWFs has also jumped.
But hold off on the all-round angst about a SWF global takeover. The WSJ’s economics blog this week pointed to research suggesting that the pockets of the world’s sovereign funds may not be as deep as reported.
In a forthcoming paper, Christopher Balding from the Milken Institute argues that headline estimates for the size of the funds are inflated because they include domestic assets that the funds have a stake in, including national oil companies. So the figures cited distorts the perception of the amount of money these funds have to deploy overseas – propping up, say, troubled banks.
Felix Salmon begs to differ, arguing that the sovereign wealth funds really are that big.
What with the burgeoning wealth of the nations behind the funds, for now at least, they still seem to have more than anyone else.
Related links
Four year low for M&A activity – FT.com
Nation’s wealth reflected in rise of sovereign wealth funds - FT.com
Sovereign wealth fund assets – Research Recap