Edinburgh was the site of the Sovereign Wealth Focus forum for the second year in a row, with Scottish Development International signed on as a sponsor, suggesting Scotland is keen to make a play for sovereign wealth fund (SWF) investments.
Scottish finance minister John Swinney confirmed the country’s interest in courting SWFs. “We are essentially encouraging sovereign wealth funds to look at Scotland as a place where they can do business in terms of investment projects. What I was trying to map out [at the forum] was essentially some of the opportunities within the renewables sector.
"Our aspirations are to realise the potential that exists, which is to provide 25% of Europe’s offshore wind and 20% of Europe’s tidal power. We’ll only realise that if this private investment stays. So we need to attract international investment to support these projects,” he told fDi.
The event was held at the University of Edinburgh’s business school in June and attracted bankers, financiers, economists and others who follow SWF activity, as well as a senior representative from Norway’s state pension fund.
SWFs could grow 10 to 15 times their current size due to a rebound in global markets, delegates heard. The IMF estimates that SWF total assets will be at £6600bn ($10,816bn) by 2012, with availability of new capital off the back of stronger commodity prices and foreign-exchange reserve accumulation. National oil-company SWFs own around 80% of global reserves. The sector is the second largest (by market cap) globally after financial services.
Mr Swinney thinks Scotland could get a slice of the expanding SWF pie. “It’s interesting to look at Scotland over the past 400 years. If you go back 400 years, this university [Edinburgh] was essentially developing some of the founding experience in modern medicine and at the same time developing thinking about financial management, financial services, financial method et al.
"And here we are 400 years later and we are still pitching about financial services, management and life sciences and clinical developments. So there are some great foundations for the Scottish economy to pitch to these funds and attract that investment.”
Despite the drubbing Scotland’s financial services sector has taken in recent years, he does not think lasting damage has been done to the country’s reputation for financial prudence.
“We’ve got to keep a sense of perspective. We have two banks that have difficulties and every other country in the world have banks that had difficulties. So, of course, there is a hit that comes to us as a consequence of that. It happened, it’s been addressed, at the same time we have lots of other companies that are doing really well and from that we should take a lot of confidence that the Scottish financial services sector remains very strong and very robust,” he said.
He also does not think the financial difficulties make a push for Scottish independence less likely.
“If you look at the financial difficulties that came in 2008, when we were the minority government in Scotland, the Scottish National Party remained committed to Scottish independence. It was a difficult time for the economy and for everybody in Scotland. We’ve just gone to the country to ask for re-election and we’ve been returned massively by an enormous endorsement from the public in Scotland. That says to me that people in Scotland have that difficulty in its proper perspective,” he said.
“Scotland is now looking forward to form a judgement about what’s the best for it to proceed and we’ll obviously make the case for the country to have the full powers of an independent country. But in doing that we want to work with the financial services sector to ensure we go about pursuing that agenda in a way that is supportive and of assistance to those in the financial services sector. I think we’ve got every opportunity to do that,” he added.