LONDON - Sovereign wealth funds will have to navigate growing regulatory scrutiny across some of their favoured areas for investment such as pharmaceuticals, infrastructure, technology and logistics, a new report said on Wednesday.

Infrastructure was their top investment by sector, accounting for 26% of total deal volume from July 2019 to September 2020, followed by services and technology, according to the Sovereign Wealth Funds report, a collaboration between IE Center for the Governance of Change and ICEX-Invest in Spain.

Pharmaceuticals, software and biotech attracted the largest investment by industry, accounting for about 19% of deals over the same period, the report said.

Regulators have focused more closely on some of those areas in the aftermath of the pandemic.

Governments of about 50 countries have imposed rules on exports of products used in the public health response to the COVID-19 pandemic, according to U.N. data cited by the report.

"An increased focus on critical infrastructure, and health care infrastructure, in particular, highlights a trend that is likely to accelerate post COVID-19: enhanced scrutiny of foreign investment, and increased time and costs associated with regulatory review of such transactions," the report said.

Among last year's notable pharmaceutical deals, Singapore's sovereign fund Temasek and other investors injected $250 million into German biotech company BioNTech, which developed a vaccine against the coronavirus with Pfizer.

Warehouses and the wider logistics sector have also been a growing investment destination for sovereign funds in the past year, accounting for about 40% of their real estate exposure by deal value, the report said.

Sovereign funds also had to be cautious in this area as governments scrambled to base more of their supply chains at home to avoid trade disruptions during the pandemic, the report said.

(Editing by Edmund Blair) ((Tom.Arnold@thomsonreuters.com; +442075428510; Reuters Messaging: tom.arnold.thomsonreuters.com@reuters.net))