SWF acquisitions rise 62 percent, highest level since 2008

LONDON (Reuters) - The value of acquisitions involving sovereign wealth funds has risen 62 percent to $28.6 billion in the year to date, the highest level since 2008, Thomson Reuters data showed on Friday.

The Qatar Investment Authority (QIA), a sovereign wealth fund, this week agreed to buy a 43-story Singapore office tower for $2.5 billion from the world’s largest asset manager Blackrock, adding to a flurry of mergers and acquisitions (M&A) by sovereign wealth funds.

Industrials, financials and real estate account for nearly 80 percent of year-to-date sovereign wealth fund M&A activity, up from 33 percent a year ago, the data showed.

Australian assets accounted for 43 percent of the activity, followed by China and Singapore with 30 percent and 11 percent of target activity respectively.

The Australian figure has been inflated by the involvement of a number of sovereign wealth funds in the planned $6.6 billion takeover of ports and rail freight giant Asciano Ltd..

Sovereign wealth fund assets increased by $200 billion in the year to March 2016 and stood at $6.51 trillion despite recent market volatility and low oil prices, data from research provider Preqin showed.

With oil prices languishing and market volatility increasing, SWFs have been looking to diversify their reserves and to find new growth areas.

Worldwide M&A deals have fallen 20 percent to $1.36 trillion so far this year compared with last year, after hitting a record high in 2015. Oil prices, worries about slowing growth in China and Britain’s looming referendum on European Union membership have weighed on sentiment.

European M&A activity, which lagged the U.S. in 2015, has hit $287 billion so far this year, down 23 percent, whist U.S. M&A is down 20 percent at $571 billion.

Goldman Sachs holds the top spot in the global M&A league tables followed by Morgan Stanley and Bank of America Merrill Lynch.

Reporting By Anjuli Davies; Editing by Keith Weir