Sovereign Wealth Funds as a key driver for growth
Since the 1990s, Sovereign Wealth Funds, whether controlled or owned directly by States or government agencies, have become increasingly widespread among those countries with large available currency reserves, deriving from exports of commodities, fiscal surpluses, or a largely positive balance of payments. Sovereign Wealth Funds are geographically concentrated above all in the Middle East, Asia and North America. These investment vehicles benefit from a "high investment grade" rating as shown by the top 20 funds in the world (with external ratings) which have a rating ranging between A and AAA.
Overall, the value of assets managed globally by Sovereign Wealth Funds (including pension funds) exceeds USD 30Tn, invested in government bonds, bonds and shares of listed and private companies. In the context of infrastructure investments, the renewables sector is very attractive for these investors, both because it offers the typical qualities of infrastructure investments and because it supports the emission reduction targets. Sovereign Wealth Funds have also joined the Paris Agreement on climate change and many are joining the Net Zero Asset Owners Alliance (NZAOA).
Sovereign Wealth Funds can also play a key role in guiding entrepreneurs on their growth path, given that their investment strategy involves a minority role in the shareholding structure and a long-term time horizon. Over the years, Italy has become an important market for Sovereign Wealth Funds, with around 300 transactions carried out. It is worth mentioning, for example, in the private equity area, the investment by Temasek in Moncler/Stone Island and in the infrastructure area the investment by OTPP in Società Gasdotti Italia, where Intesa Sanpaolo played a key role in the structuring, organisation and distribution of the acquisition financing. In this regard, the IMI Corporate & Investment Banking Division has been working for some years with a team dedicated to backing these investors and has become a recognised point of reference in the world of sovereign funds, supporting them both at fund level and acquisition vehicles and at the level of portfolio companies with financing and advisory services.
Paolo Insinga, Head of Sovereign Wealth Funds IMI Corporate & Investment Banking Division, explains what Sovereign Wealth Funds are and their impact on the world economy.