Khazanah, the bidder for Parkway, is an emerging category of investors known as sovereign wealth funds.
A sovereign wealth fund is a state owned investment fund with a mandate to invest in stocks, commodities and other assets. SWFs have become a major source of c
apital around the world in the past few years, with an estimated $3,400 billion under their control, according to SWF Institute, a body which keeps tabs on these funds.
Market watchers feel that their role will increase in the coming years as more governments join the bandwagon and other investment sources dry up.
Close to two dozen countries, including Abu Dhabi, Norway, Singapore, Kuwait, Saudi Arabia and Russia run their own wealth funds. China is also a recent entrant in the space.
However, despite these factors, these funds are not percieved very positively. A survey conducted by two communication consultants — Hill & Knowlton and Penn Schoen Berland — indicates that sovereign wealth funds suffer from major perception issues.
In terms of reputation, they rank just above hedge funds and well behind all other categories of investors. Also, there is a strong belief that investment decisions are dictated by politics.
The abovementioned survey reveals that in case of investments made by sovereing funds of Russia or China, over 80 per cent respondents feel the decision is dictated by politics.
For instance, the Chinese government has a $5 billion fund with a mandate to invest in Africa — where Chinese companies are increasingly looking for natural resources. Khazanah Nasional, which was set up in 1993 manages an estimated $25 billion.
This puts the firm amongst the mid-size sovereign funds. The biggest amounts are managed by Abu Dhabi, Norway and Saudi Arabia — with assets of $400-600 billion.