Since the global financial crisis, low interest rates have encouraged long-term investors, like sovereign wealth funds, to either start a private markets programme or allocate a greater proportion of their portfolios to unlisted assets to increase returns.
To understand how sovereign wealth funds’ approaches to private markets have evolved, IFSWF has partnered with PwC to examine their relationships and partnerships with other investors. IFSWF first examined sovereign wealth funds’ increasing allocations to private assets in 2016. At the time, sovereign wealth funds had rapidly increased their allocations but wanted to consolidate their position and build their teams’ skills. However, over the past five years, sovereign wealth funds have continued to allocate more of their portfolios to unlisted assets. One prominent aspect of sovereign wealth funds’ increasing allocations to private equity is a tendency to build partnerships with private equity general partners (GPs), commercial partners and, sometimes, their peers. We wanted to understand more about this trend, why it came to be and how these partnerships worked.
The report, Partnering for Success: Sovereign Wealth Fund Investments in Private Markets, draws on the findings of a survey circulated to all IFSWF members and asked them about their unlisted asset strategies, as well as their approach to partnerships and provides the first in-depth insight into this diverse investor group’s activities in private markets. We also spoke to five IFSWF members with different approaches to private equity investment to gain some context for the findings. We also spoke to a major private equity GP with a large number of relationships with sovereign wealth funds to gain insight into their perspective.