GCC Sovereign Wealth Funds: Why do they Take Control?

Jeanne Amar (), Jean-François Carpantier and Christelle Lecourt

Working Papers from HAL

Abstract: In this paper we examine the investment strategy of 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. We investigate what are the drivers of majority cross- border equity acquisitions made by these institutional investors over the period 2006-2015. Using both Logit and ordered Logit models, we test if the usual determinants of SWFs investments still stand when we look at influential (> 10%) or majority (> 50%) acquisitions made by GCC SWFs. We find that GCC SWFs do not consider financial characteristics of the targeted firms when they acquire large cross-border stakes but rather the characteristics of the country (countries in the European union and/or countries with a high level of shareholders protection), suggesting that their motives may go beyond pure profit maximization. We also find that transparent funds are more likely to take influential or majority stakes and that they do so predominantly in non-strategic sectors. Overall, our results indicate that even if GCC SWFs do not seek only for financial returns, acquiring majority stakes is not a lever for GCC governments to get strategic interests in the target countries.

Keywords: ordered logit model; cross-border majority acquisitions; GCC; sovereign wealth funds (search for similar items in EconPapers)
Date: 2018-11
New Economics Papers: this item is included in nep-fmk
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01936882v1
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Related works:
Journal Article: GCC Sovereign Wealth Funds: Why do they take control? (2022)
Working Paper: GCC Sovereign Wealth Funds: Why do they Take Control? (2018)
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