Sovereign funds pump $25.5 billion into global M&A: data

SINGAPORE Thu Sep 4, 2008 5:02am EDT

SINGAPORE (Reuters) - Sovereign funds have invested $25.5 billion so far this year to buy stakes in global companies such as Citigroup (C.N) and Merrill Lynch MER.N, up 66 percent from a year earlier, Thomson Reuters data showed on Thursday.

Sovereign funds such as Singapore's Temasek Holdings TEM.UL and the Abu Dhabi Investment Authority (ADIA) have become more influential in financial markets after investing in Wall Street and European banks hit by losses from risky U.S. mortgages.

These state-backed funds took part in 22 deals, of which 10 deals worth $9.1 billion involved Singapore's two sovereign funds, Temasek and the Government of Singapore Investment Corp (GIC), according to data up to Aug 28. For a table please click on

The bulk of activity was in the United States, where sovereign funds pumped in $15.8 billion in eight transactions, 62 percent of their global total and almost five times more than 2007's figure of $3.45 billion.

Ranking second was Russia, where Dubai World may invest $5.3 billion in Russian regional power firm OGK-1 OGK1.MM. Russia received no investment from sovereign funds in 2007.

Sovereign funds, which are estimated to hold assets worth as much as $3 trillion, have ballooned in recent years as large Asian exporting countries such as China, and oil-rich nations such as Abu Dhabi and Russia, started putting part of their currency reserves into investment vehicles.

Some countries where the funds invest, such as the United States, are worried that acquisitions by the highly-secretive funds could open key domestic companies to foreign control, and that they could destabilize international markets with their large-scale investments.

Sovereign funds are expected to control $10 trillion in assets between them by 2012.

Global sovereign wealth funds said on Tuesday they had reached a preliminary agreement on a set of voluntary principles to guide their investment practices, and calm fears about their motives under the International Monetary Fund.

(Reporting by Saeed Azhar; Editing by Kim Coghill)

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