Sovereign Wealth Funds and the Selective Media Spotlight
In late March, global investment banking analysis provider Dealogic released new data about sovereign wealth funds’ investments in U.S. and European financial institutions. According to this data, investments by global sovereign funds hit a record-setting $48.5 billion in 2007, and already stood at $24.4 billion by the end of February 2008.
Beyond the staggering numbers, there are a few other interesting information points. First, the announcement shows Singapore in the lead, with transactions accounting for 57% of the total amount invested in 2007. So why haven’t we heard very much about these large Singapore investments?
The majority of the media covering the sovereign wealth investment story prefers to focus on the story from a different angle, skipping over the actual amounts invested or the companies in which the investments are being made and instead opting for the more sensational, if less accurate, headlines. By shining the media spotlight on Middle Eastern sovereign wealth funds, and playing up ’scare’ issues, the perception that we should be afraid of the Middle East buying our key assets is unfairly perpetuated.
In fact, investments made in the global economy today are far more complex and critical than the story that is being told today. For example, some SWFs actually borrow money on the open global credit market, and as a result have to be as transparent as any other institutional investor. Still, the message to most sovereign wealth funds is that moving forward with full disclosure and transparency initiatives will serve you well. Given that there are clearly more investments are on the horizon–the time is now to work to have as many friends (or at least fewer enemies) around when the next investment opportunity comes along.
