How Azerbaijan’s oil fund is expanding its influence in Europe’s private markets

Azerbaijan’s State Oil Fund (SOFAZ) is stepping up its investments in Europe as it looks beyond its traditional, hydrocarbons-driven remit.

The sovereign fund, set up in 1999 to manage Azerbaijan’s oil and gas revenues, now holds assets in more than 60 countries. Its portfolio includes listed securities as well as infrastructure and renewable energy projects.

In October 2025, SOFAZ put £50 million (€57 mn) into London Gatwick Airport in a deal alongside Global Infrastructure Partners, part of BlackRock. Gatwick handles more than 40 million passengers a year and plans to lift capacity towards 75 million by the late 2030s.

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The investment gives the fund a stake in a major UK airport at a time when many sovereign investors are seeking long-term, inflation-linked income.

SOFAZ has also bought a 49% stake in 14 Italian solar plants operated by Enfinity Global, with a combined capacity of 402 MW. The plants run under long-term power purchase agreements, which the fund says provide predictable cash flows.

“These deals reflect a broader evolution among sovereign investors: focusing less on scale and more on strategic collaboration, where governance, expertise and long-term capital converge,” SOFAZ executive director Israfil Mammadov told Euronews.

He described Gatwick as “a core transport hub with a well-established regulatory framework, while Italy remains one of Europe’s most dynamic renewable-energy markets. The 14 solar PV plants in Italy operate under long-term PPAs, ensuring stable cash flows,” Mammadov continued.

Officials in Baku present the shift as part of a wider push to diversify the economy and reduce reliance on oil.

The fund says such investments are intended to support Azerbaijan’s own long-term plans to diversify away from oil and gas, presented as in line with the government’s Azerbaijan 2030: National Priorities for Socio-Economic Development strategy — which calls for more sustainable growth and greater economic resilience.

“For SOFAZ, such investments are not opportunistic — they embody our investment philosophy. By participating in resilient, income-generating assets, the Fund supports both global sustainability and portfolio resilience, ensuring that Azerbaijan’s resource wealth continues to deliver enduring value across generations,” Mammadov continued.

As of 30 September 2025, SOFAZ reported assets of $70.2 billion (€60.9 bn), up by 16.9% since the start of the year. It says the increase reflects market gains, currency moves and its asset allocation.

Over the first nine months of 2025, it generated 5.2bn manats (around €2.7 bn) in investment income, mainly from global equity and bond markets.

This growth was supported by solid investment returns, favourable currency movements, and disciplined asset allocation.

The fund works with large financial groups, including BlackRock, Brookfield, JP Morgan, Franklin Templeton, Blackstone, Neuberger Berman and KKR, giving it access to deals it would struggle to source alone.

Supporters of the strategy argue that putting part of Azerbaijan’s oil income into overseas infrastructure and renewables helps protect the public finances from swings in commodity prices.

Critics, however, point out that transparency over sovereign-wealth investments is uneven globally and say the real test will be whether funds like SOFAZ can deliver consistent returns once the current cycle in private markets turns.