SOVEREIGNWEALTHFUNDS2021ChangesandchallengesacceleratedbytheCovid-i9PandemicUNIVERSITYICEXINVESTINSPAJN SOVEREIGNWEALTHFUNDS2021EditorJavler Capape Agullar, PhDSovereign Wealth Research,AdjunctProfessorand Director,Center for the Governance ofChange,IE University Index7Preface14ExecutiveSummary23Chapter1.Towardanewnormal?Sovereignwealthfunddirectinvestments2020-202i33Chapter2.Fromcowstocodes:Sovereignwealthfundsintheagricultureandfoodsectors55Chapter3.SovereignwealthfundsembracetheSustainableDevelopmentGoals:Who,howandwhy?65Chapter4.Sovereignwealthfundsandventurecapital:co-investmentpatternsandpartners79Annex1.IESovereignWealthResearchRanking202187Annex2.SovereignwealthfundsinSpain:Arecordyear PREFACE SOVEREICN WEALTH FUNDS 202.8IPREFACEPrefaceIt is a pleasure to present this 2021 edition of thelitical tensions, puts even more pressure on energySovereign Wealth Funds Report which is producedprices. In any event, 2022 will continue to be framedoy ICEX Spain Trade and Investment and the Sove-by significant uncertainty and a continuous review ofreign Wealth Research at the IE Center for the Go-growth estimates will be necessaryveinance of Change.Foreign Direct Investment (FDI) showed a signifi-Over the years, this report has become a reputedcant recovery of 77% in 2021 compared to the pre-source for understanding the investment flows thatvious year, amounting to $1.65 trillion. This impliesarise from sovereign wealth funds and a valuablea recovery to pre-pandemic levels. The largest in-reference in the analysis of their trends. After thecrease was seen in developed economies, which re-historic fall in the global economy recorded in 2020ceived an investment of $777 billion, triple that ofdue to the COV1D-19 outbreak (-3.1%), the reco-2020. It increased by S0% in emerging and midd-very was weaker than expected in 2021. As well asle-income economies to $870 billion, with pre-pan-new restrictions on economic activity and mobilitydemic levels being reached in Latin America, al-due to new variants of the virus, there were furtherthough all regions recorded increases. The recoverynew elements of uncertainty, such as disruptionsof FDI around the world was mainly sustained byof global supply chains and higher-than-expectedhigh levels of liquidity and the availability of capi-inflation. There was also the expected rise in inte-tal on the financial markets, backed by the currentrest rates by the Federal Reserve and the first con-low-interest rates, in addition to lower valuations ofversations on fiscal consolidation in the main glo-some companies hit by the pandemie that increasedbal economies (after the public spending increasemergers and acquisition transactions. Beyond FDI,in support of companies and families). In this hi-the global M&:A market closed in 2021 at a recordghly complex scenario, the IMF estimated that theof $5.9 trillion in over 6S,000 transactions, toppingglobal economy would grow by 5.9% in 2021, withthe previous high wateimark set in 2015 by alrniostsignificant regional differences. Among the large$1.5 trillion.economies, the recovery was led by China (8% GDPgrowth), followed by the United States (6%) and theIn line with the global frenzy of investment acti-European Union (5.1%).vity, the answer of sovereign wealth funds to thisuncertain economic situation was clear: increaseLooking ahead to 2022, global economic growththe investment pace and capture value in this glo-is expected to reach 4.4% of GDP, a figure that hasbal transfomative period, flushed with cash, ac-been revised downwards by the main internationalcommodative monetary policies, and soaring stockorganizations after taking the new Omicron variantmarket valuations. With more than 450 deals, SWFsand the abcve factors into account. The possibility ofhave tripled the investment activity of our last Re-new variants of the virus emerging, the significant-port and become the most active investment yearly different levels of vaccination across the world, asin the historical series. Moreover, capital accumulawell as high energy prices continuing for at least thetion continued fueled by stock market rebound andfirst half of the year, together with the foreseeable ti-increasing hydrocarbon prices. For the first time,ghtening of monetary conditions in many countries,SWFs surpassed the 10 trillion dollars landmark inhave dampened the outlook for the global economyassets under management. That is an increase ofthis year. All this, in addition to the current geopo-11% compared to our previous report. 9This sovereign wealth funds report series, a jointpeers of SwFs when joining venture capital fundingproject by ICEX-Invest in Spain and IE University,rounds. Also, the Report analyzes the strategic useoffers a rigorous in-depth analysis of the role SwFsof SWFs on food security and agriculture. Followingplay in the global changing economic arena. The re-a multipronged strategy, SWFs invest both in es-port naps the activity and strategies of close to onetabl