Sovereign wealth funds are shifting their investment strategies to increase their focus on private investments, emerging as major players during 2025’s M&A boom, according to data collected by several law firms.
The trend, which firms attributed in part to the concentration of global capital in SWFs, can be seen in the nearly 200% increase in sovereign-backed deals from 2024. The largest participants among sovereign investors included Saudi Arabia’s Public Investment Fund; the Government of Singapore Investment Corp.; the Kuwait Investment Authority; the Japan Investment Corp.; the Qatar Investment Authority; and Norway’s Government Pension Fund Global.
Law firm White & Case LLP noted that many SWFs are “larger than the biggest [private equity] firms, and several have annual deployment targets that, excluding a select few mega-fund managers, are larger than the total fund size of most PE firms globally.”
That size and their long investment duration has helped increase the funds’ involvement in private deals.
“For years, sovereign wealth funds were viewed as discreet operators, circling the edges of global M&A,” White & Case’s review of the sector stated. “They quietly diversified away from domestic markets, largely by committing capital to PE funds. Recently, however, sovereign investors have emerged as one of the most assertive forces in global dealmaking.”
As of mid-December 2025, the total value of deals involving SWFs during 2025 was $200 billion, up from $67 billion in 2024, according to S&P Global Market Intelligence data. Meanwhile, deal volume was up nearly 13% from 2024.
“The combination of multi-decade investment horizons, access to government relationships and the absence of fundraising pressure gives SWFs a structural advantage,” the White & Case report stated.
The biggest SWF deals of the year included the PIF’s involvement in the $55 billion acquisition of Electronic Arts Inc.—the largest all-cash take-private deal ever—and the Kuwait Investment Authority’s involvement in the $40 billion deal to acquire Aligned Data Centers LLC.
“Sovereign wealth funds appear to be changing their investment strategies and are more aggressive than they were two or three years ago,” stated law firm Cleary Gottlieb in a note. “The EA deal was a bellwether. Sovereign wealth funds are becoming more assertive players in large-scale M&A and are willing to deploy substantial capital alongside traditional private equity sponsors.”
Charles Allen, Kimberly Spoerri and Zarinah Mustafa—the authors of Cleary’s note—wrote that SWFs’ involvement in M&A deals will likely accelerate in 2026 and could reshape the “competitive dynamics” for mega-deals: “Boards should anticipate sovereign wealth funds as increasingly common bidders and co-investors, particularly in technology, infrastructure and other strategic sectors,” the lawyers wrote.
Cleary Gottlieb’s note also stated that the M&A momentum is supported by improving macroeconomic conditions, more predictable regulatory enforcement, large amounts of private equity dry powder, a sharp rise in lending, increased boardroom confidence and enthusiasm, and the “potential emergence of sovereign wealth funds as major players.”
However, White & Case noted that many sellers and boards are wary of geopolitical implications or potential state influence in the deals, which could adversely affect SWFs. The firm’s report also stated that the investments can be hampered by increased regulatory scrutiny of transactions that involve fund investments.
“The Committee on Foreign Investment in the United States and other national security review regimes have taken a more expansive view of what constitutes a national interest asset,” the report stated. “And sovereign bidders, particularly from the Gulf and China, face a higher evidentiary burden to prove operational independence.”
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Tags: Mergers and Acquisitions, Private Equity, Sovereign Wealth Fund