At The Deal's Fifth Annual Private Capital Symposium, Gary Parr, vice chairman at Lazard, spoke about the rise of sovereign wealth funds. In the last eight months, sovereign wealth funds have invested over $110 billion in institutions because the institutions needed the capital, Parr said. "Many of these investments were in both American and foreign financial institutions. This is because they can put a sizable amount of capital to work immediately," he said.
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Parr also expressed concern to the government's push against on sovereign wealth fund investment. "There are so many constraints placed upon these firms by the government. Many are passive investors too. I am hoping for a change and a transformation. If we did not have investments from sovereign wealth funds, we may have been hit with a Bear Stearns-like situation earlier and possibly with plural banks."
Bear Stearns is a unique situation, although Parr could not speak about specifics because he was an adviser on the deal. "What happened in 48 hours was interesting, and we have never seen anything like it. There was a run on the bank, and the firm went from having $17 billion in excess cash to zero," he said.
Parr said that sovereign wealth funds usually look for strong brands or franchises in open economies with stable political climates. "They all have their own motivations, styles and structures," he added. - Maria Woehr
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