• Definition

• Interested Facts about Sovereign Investment

Fund
• Types of Sovereign Funds
• Ranking of Sovereign Funds.
• Challenges
• Alternative Source of Capital
• Conclusion
• A Sovereign Wealth Fund (SWF) is a state-
owned investment fund or entity that is
commonly established from balance of
payments surpluses, official foreign currency
operations, the proceeds of privatizations,
governmental transfer payments, fiscal
surpluses, and/or receipts resulting from
resource exports.
• Some funds may invest indirectly in domestic
industries.
• In addition, they tend to prefer returns over
liquidity, thus they have a higher risk tolerance
than traditional foreign exchange reserves.
• Tend to enjoy “longer-term investment
horizons” and have more flexibility with
liabilities than pension funds and insurance
companies.
• Stabilization Funds : Protect & stabilize the
budget and economy from excess volatility in
revenues/exports
• Savings / Future Generations Funds: Increase
savings for future generations.
• Pension Reserve Funds : Long term
• Reserve Investment Funds
• Strategic Development SWFs : Sustainable
long term capital growth for target countries
• Two Main Challenges :
• Funding : Capital Raising
• Investment Strategy : Objective
• SWF sourced by Commodity Surplus Trading :
Oil , Natural Gas ..etc , These types of SWF are
exposed to a critical type of risk called cyclical
risk . As these funds would take into
consideration Oil/commodity price risk ..

• Concentration Risk .
• SWF Sourced by Fiscal Surplus are likely to be
influenced by changes in government budgets
and political issues that may change the whole
investment criteria .
• Some countries have no fiscal or Commodity
surplus …!
• SWF Sourced by Fiscal Surplus are likely to be
influenced by changes in government budgets
and political issues that may change the whole
investment criteria .
• Some countries have no fiscal or Commodity
surplus …!
• Issuing Bonds
• Issuing Sukuk
• Investment Certificate .
• Sovereign : STATE (Government ) to set the
legal basis in which sovereign wealth funds
could be created in a professional and legal
manner .
• Wealth : Long Term Investment
• Fund : Well Structured , Audited and
Transparent .
• State could Establish one Main Fund and Sub
funds
• Each sub fund could have a specific
Investment Objective , Issue Investment
Certificates ,Sukuk , Bonds . i.e.: Renewable
energy
• Return on Capital is 20%
• Egyptian regulation …???
• Capital Protected Fund ….???
• Volvo Case ..( Sold to Gelly Chinese Car
Manufacturing..Imagine that SWF of Egypt
acquired Volvo ..!
• Transferring car manufacturing technology to
Egypt .
• Could manufacture cars locally with low price .
• Export to African Market and other market .
• Increase Capital Inflow of USD and release the
pressure on the Egyptian Pound
• Other Opportunities in Drugs and Medicine
Industry .
• Transparency
• Audited by top tier external auditor
• Regulated .
• Sovereign Wealth Fund could Support The
Economy of Egypt by :
• SWFs may reduce government borrowing costs.
• SWFs may limit exchange rate Fluctuations.
• SWFs may help in reducing inflation.
• SWFs may boost transparency.