Although the precise remit has not been defined, the envoy will focus on the major funds in the Persian Gulf.
France will reportedly appoint an ambassador to manage relations with sovereign wealth funds, as Europe’s third-largest economy seeks to bolster foreign direct investment. Although the precise remit has not been defined, the envoy will focus on the major funds in the Persian Gulf, including the Abu Dhabi Investment Authority, Abu Dhabi Developmental Holding Company (ADQ), Kuwait Investment Authority, Mubadala in the United Arab Emirates (UAE), Saudi Arabia’s Public Investment Fund (PIF) and the Qatar Investment Authority.
Combined, the funds account for almost $3 trillion of assets under management as of June, according to Statista Research, and feature among the world’s largest sovereign funds. Under President Emmanuel Macron, France forged close working relations with the governments of increasingly acquisitive funds in the UAE and Saudi Arabia. The latest initiative is part of a push by Bpifrance, the French public investment bank, to gain relevance, says Veljko Fotak, associate professor of finance at the University at Buffalo.
“The irony is that a fund [Bpifrance] that has, in the past, been described as a way to keep foreign investors out of French markets is now seeking foreign partners for co-investment. It almost looks like the French government is throwing in the towel—if you can’t fight foreign SWFs, you might as well join them as a co-investor.”
Buoyed by high oil prices, Gulf funds embarked on a spending spree to support efforts to diversify their economies and offset the global shift to net-zero carbon emissions amid concerns over climate change. The region’s wealth funds have identified sectors including technology and infrastructure as critical areas for investment. Saudi Arabia’s PIF, with $620 billion in assets, is said to be in talks with private equity firm Ardian on a joint bid for a stake in London’s Heathrow Airport. Madrid-based Ferrovial is looking at options for its 25% stake in the airport.
But Gulf funds have been accused of being slow to improve governance and transparency. When benchmarked against other major funds, sovereign wealth funds in the six-member Gulf Cooperation Council continue to have weaker standards of governance and transparency, the Peterson Institute for International Economics said in a policy brief last year.