Sovereign wealth funds (SWF) are increasing their exposure to listed assets as private market deal activity slows, research shows.
SWFs appetite for real estate and infrastructure deals slowed in 2017, with the number of investments in unlisted assets completed in 2017 falling to 184 from 196 the year before.
The number of listed investments rose from 94 to 119.
Part of the explanation is the increased competition across real estate and infrastructure markets, according to the International Forum of Sovereign Wealth Funds, which has published the
‘Dealing with disruption’ report together with researchers at Bocconi University, a private university in Italy.
This is particularly the case in the private property sector, which saw a 40% decrease in the total invested by SWFs between 2016 and 2017.
Greater regulatory challenges, and increased opportunities in listed markets, were also identified as driving flows away from private markets.
Bernardo Bortolotti, director of the Sovereign Investment Lab at Bocconi, said: “The global investment backdrop means the findings outlined in this report are likely to develop further over the short-to-medium term. In particular, we expect to see continued partnerships with third-party investors as a more controlled way for funds to get exposure to earlier-stage equities.”
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