UK top target in Europe for sovereign funds

ASSETS in the UK proved more attractive to sovereign wealth funds than any other country in the EU and second only to the US, a new report has found.

Sales such as a stake in Thames Water to the China Investment Corporation have meant the UK has seen more investment from sovereign funds than France, Germany and Spain combined, according to the Sovereign Wealth Funds 2012 report from TheCityUK.

Direct investments of sovereign wealth funds (SWFs) totalled $60 billion (£37.9bn) in 2011, although the figure is 40 per cent below the peak level in activity two years earlier.

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Assets under management increased for the third year running to a record $4.8 trillion in 2011, according to the report. It noted that there was an additional $7.2tn held in other sovereign investment vehicles, such as pension reserves, development and state-owned corporations’ funds and $8.1tn in official foreign exchange reserves.

TheCityUK expects SWFs’ assets under management to grow to $5.2tn this year.

The financial services industry trade body said that emerging market countries have accounted for a growing share of investments since 2009, a trend that is likely to continue. It expects funds will be channelled towards funding development of infrastructure.

Companies operating in the financial services sector, as well as the energy and utilities/infrastructure area, received most of the funding last year.

ERIKKA ASKELAND