Singapore’s GIC once again led all sovereign wealth and pension funds with $40.3 billion deployed in 2022, a “very challenging” year in which the state-owned investor segment shrank in terms of asset value for the first time ever, according to industry watcher Global SWF.

GIC’s deployment of fresh capital climbed 17 percent year-on-year, outpacing the 14 percent rise to $261.1 billion of state-owned investors overall, Global SWF said in its 2023 annual report released Sunday.

While sovereign wealth and pension funds’ assets under management fell by a respective 7.8 and 5.9 percent to $10.6 trillion and $20.8 trillion in 2022, their investment activity grew 14 percent to $261.1 billion, the report said. The number of deals dipped 16 percent to 747 as mega-deals returned and venture capital activity diminished.

“2022 was an extremely interesting and challenging year for market players, given geopolitics, high inflation, rising interest rates, and significantly negative returns in both stocks and bonds,” said Diego Lopez, founder and managing director of Global SWF. “Global economic growth is slowing down sharply, and sovereign investors must now operate cautiously in a multi-polar world.”

Singapore Heavyweights

As it outgunned all other state-owned investors in capital deployed for a fifth year in a row, GIC also chalked up 2022’s biggest real estate deal among sovereign investors: the $14 billion take-private of Store Capital alongside joint venture partner Oak Street in September.

GIC’s $7 billion cash commitment to acquire the US REIT was roughly on a par with Singapore stablemate Temasek Holdings’ outlay for UK testing company Element Materials in January. The transactions were the second- and third-largest single tickets ever spent by a sovereign investor, surpassed only by China Investment Corporation’s $13.7 billion acquisition of Logicor Europe from Blackstone in 2017, Global SWF said.

Five of the 10 most active sovereign investors in 2022 hailed from the Middle East. The Abu Dhabi Investment Authority deployed $25.9 billion in capital, zooming up the league table to second place from eighth in 2021. ADIA’s compatriots Mubadala and ADQ spent $11.3 billion (sixth) and $8.7 billion (eighth) respectively, while Saudi Arabia’s Public Investment Fund splashed out $20.7 billion (third) and the Qatar Investment Authority ventured $7.1 billion (10th).

Temasek took fourth place with $13.5 billion, and Canadian pension funds rounded out the top 10: CPPIB with $12.1 billion (fifth), CDPQ with $10.3 billion (seventh) and OTPP with $7.9 billion (ninth).

Short-Term Gloom

The forecast for 2023 remains gloomy amid fear of a new recession, Global SWF said, noting that geopolitics will play a key role in state-owned investors’ activities, with four of the top five world economies expected to be Asian by 2024 (namely China, India, Japan and Indonesia).

The key geopolitical events influencing the global economy and finance in the year ahead are the war in Ukraine, the reactivation of the Chinese economy and China’s political tensions with Taiwan, according to the report.