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Sovereign wealth funds account for 10% of the total capital available to the global private equity business, according to an estimate in a new survey by Private Equity Intelligence. The UK research firm estimates that SWFs have between $120 billion and $150 billion committed to private equity.



According to the Preqin Sovereign Wealth Funds Review, 46 surveyed SWFs possess a total of $3.05 trillion (thousand billion) of assets. Total assets have risen by 51% since the end of 2006, reports the review. Fifty-two per cent of the SWFs were found to be investing in private equity, while 33% were not. That information was unavailable for the remaining 15% of SWFs.



Besides a great diversity in SWF transparency, the Preqin review stresses the huge potential for future growth both in SWF assets and in their investment in private equity. Given their rapid growth, SWFs will be pouring “billions of dollars of new money” into private equity, even if they maintain their current asset allocations. Moreover, says Preqin, SWFs are “very likely” to increase their still relatively conservative exposure to private equity.



With 41% of total assets, the Middle East is the largest regional source of SWF capital, followed by Asia at 31% and Europe at 19%. The boom in Middle Eastern sovereign capital is driving the upsurge in the region’s private equity funds. As to the location of SWF private equity investments, Preqin found that the US and Europe were favoured.



The Preqin review comes amid a great deal of media attention to the acquisition by certain SWFs of stakes in leading private equity firms, notably China Investment Corporation in The Blackstone Group, based in New York, and Abu Dhabi's Mubadala Development Company in The Carlyle Group, based in Washington DC.