Local direct investment strategy for a GCC sovereign wealth fund

The situation

A GCC investment company wholly owned by a sovereign wealth fund retained Strategy& to develop its local direct investment strategy and policy, including portfolio allocation, investment criteria, target returns, investments rights, and constraints.

The Strategy& team was also asked to define implementation guidelines, taking into account the client’s internal structure and capabilities.

How we helped

The Strategy& team analyzed the profiles of leading regional and global investment companies and sovereign wealth funds, highlighting their direct investment strategies and characteristics. The team assessed three asset classes in the local direct investment market — private companies, infrastructure, and real estate — to determine the trends and investment potential.

To position the client in the market, the team adopted a differentiated approach: detailing the direct investment focus and characteristics across investment plays; prioritizing sectors of preference based on profit margin, size, growth, and company preference; defining plays within five high-priority corporate sectors; introducing a target portfolio deployment and capital allocation plan for the next five years; and laying out the risk and performance management approach and metrics. Finally, the team identified the implications of local direct investment on the client’s operating model and developed a five-year strategic implementation road map.

Results

Having gained senior management’s approval of the local direct investment strategy and policy, the Strategy& team presented the summary recommendations to the Board and sought buy-in on the strategy’s main highlights, then helped the client create a presentation intended for potential partners, investors, and target companies.