Among the different types of funds on the market, there is a category that has, notably since the 2000s, rapidly increased in size and number: sovereign wealth funds. These date back to the 1950s, when the Kuwait Investment Authority was created with the aim of investing the profits generated by oil extraction to reduce the country's dependence on oil. Today there are more than 100 sovereign wealth funds, most from Asian countries, managing more than US$ 10 trillion in assets.
Sovereign wealth funds have unique characteristics: they are administered by the federal government of a country, they originate from the profit from the export of commodities (oil exporting nations are a classic example) or from the transfer of part of the nation's international reserves to a specific vehicle and they have mandates quite broad, both in relation to the type of assets and the investment risk, with the aim of seeking higher returns in the long term.
Due to their characteristics, there is an increase in the participation of these funds in direct investments, which makes them act in a similar way to private equity or venture capital. This increases the types of investors that can be considered when discussing a transaction.
