GCC sovereign wealth funds (SWFs) are pivoting east as Asia’s growth story outpaces mature Western markets, Sovereign Wealth Fund Leader at Deloitte Middle East Julie Kassab told EnterpriseAM. As some of the world’s biggest spenders — Mubadala was the biggest-spending SWF in 2024 — Gulf funds are increasingly looking at Asian economies that offer a “compelling mix of higher growth potential, younger demographics, and expanding consumer markets,” she said.

Despite domestic investments being important for most Gulf SWFs, Asia remains a priority, Kassab said, adding that Gulf SWFs will aim to “optimize their portfolios, balancing domestic priorities with strategic international investments.”

Asia still accounts for a small portion of Gulf SWFs’ portfolios, but allocations are steadily growing. Adia’s portfolio in 2024 is predominantly allocated to North America at 45-60%, while emerging markets get 10-20% and developed Asia gets 5-10%. This year, Adia has gone big on Asia, particularly India. It invested USD 200 mn in medical manufacturer Micro Life Sciences, took a 5.1% stake in IDFC First Bank for around USD 310 mn, and joined the USD 395 mn IPO of Anthem Biosciences and HDB Financial Services’ 3.4k crore (c. AED 1.5 bn) pre-IPO funding round. Meanwhile, PIF secured an exemption from India’s foreign ownership rules.

Meanwhile, Mubadala currently allocates 12% of its portfolio to Asia, though it plans to more than double its Asia exposure to 25%. Recent commitments from Mubadala include India’s Manipal Health Enterprises, South Korea’s LG Chem, a USD 150 mn investment in Hong Kong-based FWD Group’s IPO, and PAG’s renewable energy fund PAG REN I. It also formed a USD 1 bn private credit partnership with Goldman Sachs last year to invest in Asia-Pacific prospects.

Approaches differ by fund: “Abu Dhabi Investment Authority is a pure financial investor without offices overseas, so they will always try and leverage partners on the ground,” López said. “Mubadala is different, it has significant offices in both Moscow and Beijing and it seeks economic advancement of the UAE, besides financial returns. And PIF is just getting started in Asia, after getting a qualified foreign institutional investor (QFII) license only a few years ago, and just recently opening in Hong Kong and Beijing,” he added.

Asia’s priorities align well with the Gulf’s: Gulf funds are chasing Asia’s energy transition and digital push, as they continue to prioritize diversifying their economies and portfolios away from oil. Kassab pointed to the continent’s expansion in renewables, advanced manufacturing, and tech innovation, which create both attractive investment prospects and platforms for knowledge transfer. Rapid urbanization and infrastructure growth also fit neatly with SWFs’ long-term horizons.

Western markets, meanwhile, are losing some shine. North American assets “present high volatility and uncertainty,” while European assets “lack significant growth,” Global SWF Founder and Managing Director Diego López told us. Kassab added that stronger government-to-government ties are also giving Gulf funds access to previously restricted sectors such as infrastructure.

Gulf SWFs are not pouring investments in a vacuum — they’re strategic in their choices. “Sovereign funds are helping create stronger business and trade links between the Middle East and Asia,” Lopez said. “The corridor Middle East-Asia is getting busier and SWFs are playing an important role in making it happen,” he added. Investments are taking place alongside a major diplomatic push for closer ties with the region. The UAE has trade and economic partnership agreements with India, Vietnam, Indonesia, and Malaysia, Azerbaijan, and Turkey and is gearing up for an agreement with the Philippines.

Who’s in the spotlight? India and China dominate the agenda. “Major Asian economies such as India and China remain central to Gulf SWF strategies due to their scale, innovation ecosystems, and robust consumer markets,” Kassab said. Top focus areas include renewables, technology, infrastructure, healthcare, and consumer goods, Kassab said. Advanced manufacturing and real estate are also gaining momentum, she added

Each country offers prospects in key strategic sectors: In China, UAE SWFs are targeting EVs, data infrastructure, and advanced manufacturing, while Saudi funds are focusing on “strategic partnerships and co-investments, particularly in transformative sectors like renewables and technology,” she said. “In China, it may be more technology and innovation; in India it may be more renewables and toll roads; and in Indonesia it may be more healthcare and consumer,” López said.

The next frontier: Southeast Asia is becoming a bigger part of the mix. López noted that while China, India, and Indonesia have traditionally been the big three, “other smaller economies such as Vietnam or Malaysia [offer great prospects] too.”

Kassab also name-checked Vietnam, Malaysia, and Bangladesh as among the smaller nations in Asia who are gaining traction, due to their resource strengths and growing middle-class populations, Kassab said. Vietnam and Bangladesh in particular show promise in renewables, logistics, and consumer technology, she added.

Not every partnership has delivered as expected: Mubadala had to unwind its private credit venture with BlackRock in Asia after struggling to source transactions that met return targets.

What’s still missing? Success requires “calibrated entry strategies,” Kassab said, suggesting that SWFs could strengthen their approach by “expanding regional partnerships, establishing local offices, and collaborating with development finance institutions.” She also flagged underexplored areas including healthcare infrastructure, agri-tech, edtech, and climate adaptation as promising frontiers for Gulf capital.

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