PwC Middle East – Sovereign investment funds

Delivering insights and expertise to elevate fund performance

Overview

Sovereign Investment Funds (SIFs) in the Middle East represent a critical backbone of the region's economic and financial landscape, encompassing state-owned entities such as Sovereign Wealth Funds (SWFs), state-backed investment arms and public pension funds (PPFs). These funds are instrumental in driving the economic diversification and strategic development goals of Middle East countries, and to attract foreign direct investments.

In 2023, the Assets under Management (AuM) of SWFs in the Middle East region reached a historic peak of USD 4.1 trillion, led by entities such as PIF, ADIA, Mubadala, ADQ, and QIA. In particular, SIFs from the Gulf states have been increasing their economic impact and influence regionally and globally at a rapid pace, and are projected to grow to USD 7.6 trillion in AuM, primarily driven by sustained high oil prices and a maturing investment landscape and portfolio of companies.

PwC Middle East is a long standing and trusted advisor to the sovereign investment community in the Middle East and Gulf nations in particular. We have a major presence in KSA, the UAE, Qatar, and Oman, and leverage our global network’s centres of excellence. Our dedicated SIF team in the region offers specialised advice to SIFs across a range of services from strategy through to execution and transformation, tailored to the unique needs and ambitions of clients in the region.

This includes:

Investment and portfolio / capital allocation
Business planning and feasibility studies
Transaction advisory
Due diligence (financial, commercial, operational, tax, technical/IT)
Valuations
Corporate finance and M&A (buy-side and sell-side advisory support)

Joint venture and partnerships advisory
Business restructuring
Post merger integration & carve outs
Investment structuring
Operating model design
Value creation and transformation

SIFs in the Middle East will continue to strategically deploy their capital across diverse asset classes and focus on building out and scaling their sector expertise, geographic presence regionally and globally, and operational capabilities — using data and analytics to better inform investment and portfolio allocation decisions.

The growth trajectory of SIFs in the Middle East region are shaped by three key megatrends:

Aligning with the Middle East's rapid technological advancement to foster innovation and efficiency through comprehensive digitisation and effective data optimisation strategies.

Navigating the challenges and opportunities of global integration to ensure continued progress and competitiveness in the Middle East. This includes localising industry value chains and aligning local investment agendas by taking global knowledge and opportunities and repackaging them for local optimisation.

These megatrends underscore the strategic importance of SIFs in driving the region's economic growth, sustainability and integration into the global economy, and positioning the region as a global economic trading hub between east and the west.

Tailored strategies for the Middle East

In the heart of the region’s dynamic economic landscape, PwC Middle East is at the forefront of the region’s economic transformation. The PwC Middle East Sovereign Investment Funds team offers tailored strategies to empower SIFs to achieve exemplary performance. Our deep understanding of the region's challenges and opportunities, combined with our global perspective, enables us to offer customised plans that navigate the complexities of today's investment environment and seize the transformative potential of tomorrow. We excel in demystifying the complexities surrounding SIFs and position them as pivotal instruments for national wealth management and economic diversification. PwC is at the heart of driving these strategic programmes, with SIFs as the engines of these initiatives, ensuring the region’s sustained growth and development. Our approach spans from strategy to execution to transformation, ensuring end-to-end involvement across the entire value chain. We are committed to creating value at every stage, from inception to completion, and driving comprehensive transformation that delivers lasting impact.

Working with PwC Middle East

Deals origination and execution
Investment strategy and value realisation
Tax advisory (fund & portfolio)
Fund strategy, governance and organisational design
Sustainability strategies and solutions
Data and digital transformation

Deals origination and execution

PwC Middle East engages with investors and asset managers in the region, providing a range of services throughout the investment cycle. This includes pre-financing, crafting sourcing strategies and conducting comprehensive due diligence that aligns with the region's business culture and regulatory frameworks. We also offer leadership development, post-investment performance enhancement and strategic portfolio management services, all of which are designed to maximise the value realisation within the diverse and rapidly evolving Middle Eastern investment landscape.

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Investment strategy and value realisation

Our tailored approach encompasses rigorous search and screening processes, crafting investment plans specifically designed to realise value and optimise assets post-transaction. Our strategic focus is to promote top- and bottom-line growth, while improving cost efficiencies. We offer guidance in planning and executing transformation programmes that ensure your assets remain stable, relevant and attractive to investors. Our commitment extends to supporting the progress of your current investments and unlocking new opportunities for transformation, in line with the Middle East's objectives for economic diversification and sustainable development.

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Tax advisory (fund & portfolio)

PwC Middle East’s expertise in fund taxation for sovereign investors in the Middle East encompasses the entire fund lifecycle, from initial setup and structuring, which is carefully tailored to reflect the distinctive positions of sovereign and pension investors within the region. We provide vigilant monitoring of legislative changes, ensuring that our clients are ahead of developments that could impact their investments. Additionally, we focus on identifying and capitalising on opportunities to enhance efficiencies, taking into account the unique regulatory, economic and cultural landscape of the Middle East. This comprehensive approach is designed to optimise the tax positions of sovereign funds, aligning with the region's strategic investment goals and governance standards.

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Fund strategy, governance and organisational design

PwC Middle East offers specialised advisory services tailored to guide sovereign, alternative and traditional asset managers through strategic business planning, designing and implementation of target operating models, developing optimal organisational structures and talent strategies. Our advice is crafted to align with the region’s unique economic landscape, cultural nuances, and the strategic priorities of Middle Eastern investment entities. Our approach ensures that asset managers are well-positioned to navigate the complexities of the regional market, capitalise on growth opportunities and achieve sustained success in a competitive and rapidly evolving environment.

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Sustainability strategies and solutions

We assist our clients in crafting a sustainability strategy for their funds that aligns with regional priorities, such as energy transition, water conservation and social development. We help implement robust internal governance and controls, sophisticated data strategies and analytics, and comprehensive market and customer reporting. This approach is designed to meet the specific needs and regulatory requirements of the Middle East, ensuring that funds not only contribute to sustainable economic growth, but also adhere to the highest standards of transparency and accountability in a region that is increasingly focusing on ESG principles.

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Data and digital transformation

PwC Middle East partners with clients to drive data and digital transformation initiatives that align with the region's technological advancements and strategic priorities. We offer comprehensive services, from assessing current digital capabilities to implementing advanced analytics, automation, and digital solutions. Our approach leverages data for strategic decision-making, operational efficiency, and innovation. By integrating cutting-edge technologies and robust data strategies, we ensure that clients remain competitive and resilient in the Middle East's rapidly evolving market.

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