The value of global private equity deals with sovereign wealth fund investment fell by nearly half in 2022.

Transactions with sovereign wealth fund investment totaled $39.03 billion across 11 deals in 2022, compared to $74.36 billion across 10 deals a year earlier, according to S&P Global Market Intelligence data.

The size of these deals also decreased year over year. In 2021, the three largest transactions were valued at $32 billion, $20.01 billion and $17 billion, while 2022's top deal was below $12 billion.

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The fourth quarter of 2022 saw the highest deal volume and value for the year, with five transactions totaling $22.24 billion. But the quarter's deal value was down 39.9% from $37.01 billion in the corresponding period of 2021.

Deal shift

Sovereign wealth funds appear to be pivoting away from private equity deals. 2022 was far stronger for non-private equity deals with sovereign wealth fund involvement compared to the previous year. Aggregate value for these deals grew 84.9% to $32.03 billion in 2022 from $17.32 billion in 2021.

Across all M&A backed by sovereign wealth funds, companies in the U.S. and Canada were the main target with an aggregate transaction value of $50.79 billion. Europe amounted to $14.14 billion, while Asia-Pacific and Middle East transactions totaled $3.41 billion and $2.72 billion, respectively.

Sovereign wealth funds from the Middle East reported the highest number of overall deals in 2022, with investments in 31 transactions. Sovereign wealth funds from Asia-Pacific participated in 21 deals.

Largest deals

The pending acquisition of a 55% stake in Emerson Electric Co.'s climate technology business by Blackstone Inc.; Abu Dhabi Investment Authority, or ADIA; and GIC Pte. Ltd. for $11.75 billion was the largest sovereign wealth fund-backed private equity transaction in 2022. The deal includes a $9.5 billion cash consideration and a $2.25 billion debt consideration.

The second-largest deal involved GIC and ADIA in partnership with Hellman & Friedman LLC and Permira Advisers LLC, which acquired application software company Zendesk Inc. from an investor group for $9.89 billion in November 2022.

Next was ADIA and Thoma Bravo LP working together on the $8.19 billion buyout of business spend management platform Coupa Software Inc.