GCC Sovereign Wealth Funds: Why do they take control?

J. Amar, C. Lecourt and Jean-François Carpantier

Journal of International Financial Markets, Institutions and Money, 2022, vol. 77, issue C

Abstract: In this paper, we investigate what are the drivers of cross-border equity acquisitions made by Sovereign Wealth Funds (SWFs) of the Gulf Cooperation Council (GCC) countries. GCC SWFs are considered as relatively opaque investors and strongly politicized, raising some concerns for perceived political and security risks. Using both Logit and ordered Logit models, we test if the usual determinants of SWFs investments still stand when we look at large or majority acquisitions made by GCC SWFs. Unlike results found in the literature investigating the determinants of SWFs cross-border investments, we find that GCC SWFs do not take into account the financial characteristics of the target firm by taking majority stakes, apart from its financial wealth. The economic, institutional and financial factors of the target country as well as the existence of trade agreements between both countries do not matter in their acquisition/control decision. We also find that firms operating in strategic sectors are targeted by GCC SWFs for diversification purposes but not for the purpose of acquisition or control. Overall, our results lend support to the hypothesis that GCC SWFs differ from other institutional investors in terms of acquisition decision strategy and that financial and commercial motives are not the exclusive target of their acquisition strategy.

Keywords: Sovereign Wealth Funds; Cross-border Majority Acquisitions; Ordered Logit model; GCC (search for similar items in EconPapers)
JEL-codes: F31 G15 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Working Paper: GCC Sovereign Wealth Funds: Why do they Take Control? (2018)
Working Paper: GCC Sovereign Wealth Funds: Why do they Take Control? (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:77:y:2022:i:c:s1042443121001980

DOI: 10.1016/j.intfin.2021.101494

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