Gulf cooperation council sovereign wealth funds at the forefront of a strategic global expansion
Authors:
Julie Kassab: NSE Sovereign Wealth Fund Leader, Deloitte & Touche (M.E.) LLP
To the point
- The potential future outlook for SWFs and why focusing on Asia now may define their strategic direction.
- GCC SWFs are expanding to diversify beyond oil and building long-term resilience.
- Asia’s fast-growing markets offer major opportunities in tech AI and sustainability.
- Investment in Africa boosts both returns and geopolitical influence.
During the 2008 global financial crisis, GCC SWFs had a reputation as lenders of last resort, supporting large Western financial institutions. They acquired distressed iconic assets across the United Kingdom and France and provided a stable source of capital across industries in Europe and the United States.
Forged from the region’s vast oil and gas revenues, these colossal pools of capital have long been a familiar presence on the global financial landscape for decades, but their attention was largely on the developed and stable economies of the West. As they grow in size and influence, however, that traditional focus on the transatlantic axis is evolving into a multipolar strategy that looks with equal measures of ambition and purpose to the dynamic economies of Asia, Africa, and beyond.
Today, the GCC SWFs collectively manage almost US$6 trillion in assets under management, more than 40% of the global total, according to Global SWF. That growth trajectory is expected to continue, making them a dominant force in the world of global finance. Abu Dhabi’s Mubadala was the largest sovereign-owned investor globally last year, deploying US$29 billion across 52 deals, a 67% increase from the previous year.
Driven by economic and geopolitical imperatives, GCC SWFs are leveraging this financial power to expand their political influence, emerging as proactive, purpose-driven investors targeting future-focused sectors from biotech to AI. Their rise is part of a global trend: the number of SWFs worldwide has more than tripled since 2008, with assets exceeding US$14 trillion. Both the size and number of deals are trending upward, reinforcing the GCC’s push toward new investment frontiers.
This increased global competition is reinforcing the GCC’s push toward new investment frontiers. Burgeoning trade ties with India and China are creating new opportunities for state-owned GCC investors seeking exposure to high-growth economies. GCC SWFs are increasingly partnering with the investment vehicles and programs of host nations, opening representative offices and building enduring alliances that bolster both their diplomatic and financial clout.
Historically, GCC SWFs pursued a straightforward strategy. They acquired prestige assets in London and other global financial hubs and seek stable, passive returns. Saudi Arabia focused on US Treasury bonds, supporting both the dollar and long-standing economic alliances.
For decades, this strategy served its purpose: preserving wealth for future generations. That approach began to evolve as GCC nations developed and younger leaders took the helm, rolling out ambitious plans to transform their economies and prepare for a time after oil.
Building the infrastructure, cities and industries to nurture post-oil economies requires significant investments but is anticipated to generate long-term returns. As part of Vision 2030, Saudi Arabia unveiled real estate and infrastructure projects worth over US$1.3 trillion.
SWFs like PIF and Abu Dhabi Investment Authority (ADIA) have become primary investment vehicles for these transformations, seeking returns that hedge against oil price fluctuations. Saudi Arabia, for instance, requires crude above US$90 to cover expenditures this year, according to Bloomberg Economics, while benchmark Brent has averaged just over US$68 this year.
The pursuit of higher returns also aligns with broader geopolitical hedging as China and India rise economically. In late 2023, the United Arab Emirates joined the BRICS+, a bloc of emerging economies—including Brazil, India and China—aiming to counterbalance US-led institutions. Concurrently, Western restrictions on GCC investments in some strategic sectors in the West—such as the United Kingdom forcing Abu Dhabi-backed international media institute to dramatically reduce its stake in The Telegraph—are reinforcing this strategic realignment.
Against that backdrop, GCC governments, with vast resources, small populations, and central geographic positions, are leveraging SWFs as instruments to secure a larger role on the global stage.
The most dramatic shift has been toward the vast, growing and technologically advanced economies of Asia. India and China, which alone accounted for nearly half the world’s economic growth in 2023, according to the International Monetary Fund’s (IMF) World Economic Outlook.
GCC SWFs invested US$9.5 billion into China in September 2024. ADIA and the Kuwait Investment Authority (KIA) are now ranked among the top 10 shareholders in Chinese A-Share listed firms. ADIA and Mubadala were part of a consortium that invested US$8.3 billion in China’s biggest mall manager.
Investments are also flowing into India and Southeast Asia, targeting sectors like tech and AI, logistics, infrastructure, and renewables.
Where once they oversaw their global investments from offices in London and New York, GCC SWFs are increasingly setting up representative offices in China and other key Asian centers.
ADIA announced last year it was opening an office in Gujarat International Finance Tec City to oversee current and future investments in India.
It’s been particularly active in Southeast Asia, partnering with the Indonesia Investment Authority on the Trans Java Toll Roads platform and joining a consortium that acquired Malaysian Airports Holdings in February.
Asia will likely see more investment as trade surges. The Asia House think tank predicts GCC trade with emerging Asia will rise from US$450 billion in 2023 to US$680 billion in 2030. GCC-China trade is expected to surpass combined trade with the United States, the United Kingdom and Western Europe by 2027.
Strategic agreements like the UAE-India CEPA (Comprehensive Economic Partnership Agreement) further facilitate capital flows, and it seeks to replicate this in Southeast Asia.
GCC SWFs are also increasingly co-investing with counterparts across Asia and co-investing in Africa in mutually beneficial strategic opportunities.
Strategic considerations drive GCC investments in Africa, spanning ports, mining, renewables, and agribusiness. State-owned GCC companies are boosting their presence, propelled by a race for resources, food security and political influence.
In 2023, GCC investments in Africa exceeded US$50 billion, with the United Arab Emirates emerging as the fourth largest direct investor.
DP World, a global logistics and port operator headquartered in Dubai, United Arab Emirates, operates seaports in Angola, Djibouti, Egypt, Morocco, Mozambique, Senegal, and Somaliland.
Egypt has become a major focus. Last year, Developmental Holding Company (ADQ) led a US$35 billion investment, including rights to a mega-project at Ras El Hekma on the North Coast . In May, Abu Dhabi Ports Group partnered with the Suez Canal Economic Zone to develop an industrial and logistic park near Port Said. Qatar Investment Authority (QIA) has also partnered on renewable energy projects in South Africa.
While the volume is yet to match Asia, by collaborating with platforms like the African Sovereign Investors Forum and Africa50, a pan-African infrastructure investment platform , GCC SWFs are embedding themselves in the continent's development story, building enduring partnerships that promise both financial and strategic dividends.
