There are two primary reasons why those seeking capital have trouble tapping into sovereign wealth funds. And—surprisingly—neither one of them has to do with the importance of commonly-touted business relationships.
Misstep One: Fund managers are usually on the defensive when they approach sovereign wealth funds. Yes, the meetings can be tough, but only because you are dealing with seasoned investment professionals. Turn the table. Remember that you are there to solve an essential, core problem. How can the institution put capital to work for future generations? Your approach could be an answer.
Misstep Two: Rigorous background research on sovereign wealth funds often falls by the wayside, especially among a flurry of international meetings. Basic fact: Every sovereign wealth fund has a personality. Some are wildly conservative, while others have pockets of liquidity for speculative ideas. Does the institution appear to have an affinity interest in your discipline? Have there been notable successes—or failures—that can center an investment-strategy discussion?
Confident, market-savvy approaches usually win the day, at least in terms of securing a vital first meeting. Collegial relationships, to be realistic, can accelerate that process, but not always. Major sovereign wealth funds cull through hundreds, perhaps thousands, of opportunities every month. Deal flow percolates from every corner of the world.
A recent article in the South China Morning Post suggests that sovereign wealth funds based in the Middle East are no longer tethered to Western investments. “Middle East Investments in China to Bloom in Amount, Scope in 2024” suggests these institutional investors are now highly responsive to East Asia, if not a range of geographies. This trend toward forceful, worldwide diversification will evolve over time. ■
Learn more at the South China Morning Post
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