Sovereign wealth funds, and their $3.3 Trillion arsenal.. VC’s & PE’s move over
Posted by: in Raising MoneyFiled under: Raising money, Investments, Public or private?
The late 1990’s and early 2000’s were the years of venture capital funds. 2006 and 2007 were the years of private equity funds. Gone are the multi-billion dollar club deals that were nothing short of the old leveraged buyouts. But 2008 and perhaps beyond might end up being the years of sovereign wealth funds.
The Financial Times is reporting that sovereign wealth funds grew 18% last year as commodity prices rose and as foreign exchange reserves in Asia built up. But the raw dollar amount is astronomical….. $3.3 Trillion…. $3,300 Billion….
It looks like high oil and gold prices suck away dollars faster than they have the ability to be spent otherwise, plus all the goods that come to America and Europe from Asian countries has created a vast wealth transfer. That’s the new world, like it or not.
If you’d like to compare this $3.3 trillion figure, this compares to an estimated $13.79 to $13.86 Trillion total GDP according to the CIA’s World Factbook.
It’s pretty tough to plunk down $10 Billion in a transaction because the size of that alone is massive. If they could magically place that much money each time, there would be enough for 330 investments of $10 Billion per transaction.
Having $3.3 trillion in liquidity and being able to place $3.3 Trillion into raw investments is another issue entirely. If the U.S. needs help with those mortgages they’ll end up taking, maybe its time to pick up the hotline. The reality is that this would take thousands of transactions before that $3.3 trillion would be fully invested.
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