Are sovereign wealth funds “white knights”?

Jerome Couturier (ESCP‐EAP European School of Management, London, UK)
Davide Sola (ESCP‐EAP European School of Management, London, UK)
Paul Stonham (ESCP‐EAP European School of Management, London, UK)

Qualitative Research in Financial Markets

ISSN: 1755-4179

Publication date: 2 October 2009



In the continuing credit squeeze, sovereign wealth funds (SWFs) are still active in international lending and are eagerly sought out by large, cash‐strapped companies in the West. The purpose of this paper is to examine their nature and strategies before and after the onslaught of the credit crunch and global economic downturn in order to advise corporates on how best to design their strategies and terms in approaching the SWFs for funds.


An analysis is made of SWFs in their dealings with Western corporate borrowers and a case study made of Barclays Bank which, faced with three major options in 2008 to raise a large amount of cash, chose to attract funding from three Gulf SWFs.


SWFs certainly qualify as lenders of last resort (“white knights”), providing ready loans, albeit on premium terms, at a current time of severely restricted credit supply from other sources. Alternative sources of funds – stockholders and government bail‐out – also suffer from disadvantages relating to the characteristics of their loans.

Practical implications

Corporate borrowers should currently view SWFs as attractive “white knight” sources of loans when other providers are constrained. The analysis in this paper, including the experience of a major borrower, Barclays Bank, suggests that SWFs are demanding tougher terms as a result of their strong bargaining positions and historical losses, and that companies should tailor SWF loan contracts to contain maximum incentives and safeguards to produce successful results.


This is the first paper to analyse the new role and strategies of SWFs in the credit crisis context, as well as the required response of cash‐strapped companies seeking loans from them.



Couturier, J., Sola, D. and Stonham, P. (2009), "Are sovereign wealth funds “white knights”?", Qualitative Research in Financial Markets, Vol. 1 No. 3, pp. 142-151.

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