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| Strategic Investment Funds
BOX 2.2
Palestine Investment Fund The Palestine Investment Fund (PIF) was set up in 2003 to function as a sovereign wealth fund. It was recast in 2006 as a strategic investment fund pursuing a double bottom line mandate to invest in underserved sectors in West Bank and Gaza. PIF is a public shareholding company under the companies controller, adhering to the standard laws and regulations applied under the local Companies Law. It currently has US$1 billion in assets under management.a Given the lack of a thriving local economy, PIF originates projects and incubates companies and industries. It is a dominant investor in West Bank and Gaza in several sectors including renewable energy, agriculture and agribusiness, health care, and
hospitality. PIF’s strategy is to establish businesses, rather than purchase stakes in existing companies, and it is often the only shareholder in a business. PIF currently has 16 strategic investments in small and medium enterprises, real estate, natural resources, and construction. It employs a buy-and-hold strategy given the difficulty of exiting. Exits occur mainly on the Palestine Exchange because of the dearth of strategic buyers to invest in the economy. PIF also leverages strategic partnerships to invest in West Bank and Gaza. For example, in March 2019, PIF partnered with the European Investment Bank to finance 35-megawatt rooftop solar projects for 500 public schools in the West Bank (Hill 2019).
Source: World Bank. a. For more information, see the PIF website (www.pif.ps/home/).
Equity Fund with the United Kingdom’s Department for International Development in 201822 to invest in sectors aligned with ambitious national targets that drive India’s market for climate mitigation and adaptation infrastructure investments.23 The fund—which is mandated to invest in clean energy, clean transport, and water and wastewater management—was launched at a time when global policy and technological trends suggested it was opportune to invest in advanced climate mitigation and adaptation solutions. Confronting climate-related challenges has also been the province of some SIFs initiated by quasi-sovereign entities. Asia Climate Partners (ACP), for instance, is a US$450 million private equity fund targeting the renewable energy, resource efficiency, and environmental sectors in emerging Asia, launched in November 2014 as a joint initiative of three founding partners: the Asian Development Bank, ORIX Corporation, and Robeco.24 With the potential to solve market failures and the appetite to pursue longterm strategic problems, SIFs can make attractive partners not just for private investors but also for other sovereigns, allowing governments to benefit from the heft of intergovernmental partnerships. The commercially attractive characteristics of SIFs, combined with the appeal of intergovernmental relationships and bilateral investment, have led to a plethora of strategic investment alliances between SIFs or between governments through their SIFs or SWFs. These alliances are typically formed by sovereigns to invite capital and technology transfer and know-how to their home countries, or to secure market expansion for their entrepreneurs and businesses (see table 2.7 for an illustrative list of such alliances). In December 2016, for instance, the governments of Morocco and Nigeria agreed to finance a gas pipeline project through their respective strategic investment funds: Morocco’s Ithmar Capital and Nigeria’s
