Sovereign Wealth Fund Institute

Politically and economically, the European Union has been struggling to keep itself together. In recent months, numerous high-level government officials from several European nations have been courting foreign institutional investors to buy government bonds, allocate money to EFSF investments, and invest in capital increases in large scale European companies. Some government officials have been trying to arrange deals to sell public assets to foreign state-owned enterprises (SOE). For example, the Chinese state-owned China Ocean Shipping (Group) Company (COSCO) purchased the rights to a Greek container port in Piraeus for 35 years with an option for an additional 5 years for €3.4 billion. Some Greek dockworkers were not happy with the financial arrangement as labor rates changed and around 16% of workers were let go or forced into early retirement.[Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

Japan’s nuclear crisis will have a lasting impact on existing and future nuclear infrastructure projects globally. Last year, sovereign funds began an aggressive campaign to bid on energy infrastructure, mostly in conventional energy assets.  [Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

The SWFI Index Committee and Park Alpha has determined which constituents will be added or deleted for the first half of 2011.  None of the constituents were removed from the index.  Four companies were added to the index, bringing the total # of constituents to: 41 from 37.  This will take effect on 1/3/2011.

New Companies added to the Sovereign Wealth Fund Strategic Index

1. Hochtief AG
2. AIA Group Ltd
3. Agricultural Bank of China
4. Areva

About the SWF Strategic Index

This market capitalization-weighted index gauges strategic sovereign wealth fund investment in public equity markets around the world. Currently, the index includes 41 publicly traded equity securities, from the original 30 selected in 2008. This index can be used as a benchmark to track aggregated SWF publicly traded strategic investor performance. In addition, it is a proxy to illustrate where strategic government cross-border equity investment flows. Governmental funds can use the index as a policy benchmark to compare their direct equity investment performance. We contribute to the investment process by delivering performance benchmarks and useful research tools, and as the basis for various investment vehicles.

This index is maintained by the SWFI Index Committee. It is a team comprised of analysts from both Park Alpha and the Sovereign Wealth Fund Institute (SWFI). The purpose of the Index Committee is to ensure the index remains a primary indicator of aggregated SWF publicly traded strategic performance. The Index Committee determines constituents on a semi-annual basis. The Index Committee constantly monitors events and makes sure index turnover is kept low.

After a long series of tense negotiations with various potential institutional investors, Areva SA, the French controlled company is planning to receive capital by year end.  The firm has around 3% of its capital listed, which are non-voting investment certificates.  [Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

Businessweek reports, “France is close to selling a stake in nuclear-reactor maker Areva SA to Kuwait’s sovereign wealth fund, with the first stage of a capital increase “imminent,” Industry Minister Eric Besson told radio broadcaster Europe 1.  Besson wasn’t able to say whether that means “in a few hours or a few days,” he said in an interview with the broadcaster today. The minister said France will take part in the capital increase, declining to say for how much.

“The first phase of the recapitalization of Areva, you’re right, it’s imminent,” Besson said. “The negotiations are ongoing” and talks with the Kuwait fund “are advancing well.”

French Finance Minister Christine Lagarde said Dec. 1 that the country was in “active” talks with the Kuwait Investment Authority about selling a stake in Areva.

Source: Businessweek

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Bloomberg reports, “The French government is seeking commitments from Mitsubishi Heavy Industries Ltd. and the sovereign funds of Qatar and Kuwait to buy new shares in nuclear company Areva SA by the time the Areva board meets on Nov. 16, two people with direct knowledge of the talks said. The state, owner of 91 percent of Areva, may sell shares in two stages to avoid a delay into 2011, said one of the people, who requested anonymity because talks are private.

The sale to sovereign wealth funds may take place this year, while a deal with industrial partners may not happen until 2011 because talks about cooperation are more complex, the person said. Areva Chief Executive Officer Anne Lauvergeon has been pushing for the capital increase to help fund spending on plants and uranium mines. The company, whose finances have been hurt by construction cost overruns at a reactor in Finland, is seeking to fend off competition and sell more reactors and fuel in Europe, China and India. Failure to seal talks with Kuwait and Qatar by next week would drag the entire stock sale into 2011, the person said.”

Read more: Bloomberg

According to BusinessWeek, “Two top Qatari leaders said the country is interested in buying a stake in French nuclear power producer Areva SA. Qatar plans to invest in Areva as soon as the two parties reach an agreement, Qatar Investment Authority board member Hussain al-Abdulla and Minister of State for Energy Mohammed al- Sada said at an energy conference in Paris today. The investment authority is Qatar’s sovereign wealth fund.

“I don’t know exactly how long it will take but certainly there is an interest from the Qatari side,” al-Sada said during a press conference. “It’s under discussion.”

He declined to say how large the holding in Areva might be or when the purchase could take place. Areva Chief Executive Officer Anne Lauvergeon, who also attended the energy conference, declined to comment on the deal.

Qatari Prime Minister Sheikh Hamad Bin Jasim Bin Jaber Al- Thani said on Feb. 10 that Qatar was considering an investment in Areva.”

read more: BusinessWeek

According to BI-ME, “Kuwait and France on Thursday signed an initial agreement on nuclear cooperation that includes exchanging expertise on the field, the official news agency KUNA reported. The agreement encourages the peaceful use of atomic energy to bring in vital energy resources such as electricity, the report said, without providing any details of the cooperation. Earlier on Wednesday KUNA had reported that Kuwait may be interested in acquiring a stake in France’s nuclear giant Areva, citing unidentified industry sources.

‘Areva says it needs the capital injection to finance the expected rapid development in the nuclear market,’ Kuna said.

The news agency added that Anne Lauvergeon, the CEO of Areva, did not give details on ongoing contacts with potential investors, ‘but industry sources have said that Kuwait could be interested in taking a stake in Areva’.

Lauvergeon reportedly said Wednesday that the talks taking place with potential partners are at a government-to-government level and that a number of partners were involved. In March, Deputy Prime Minister and Minister of Defence Sheikh Jaber Moubarak Al-Hamad Al-Sabah said Kuwait will cooperate with France in the field of nuclear power, hinting it could take a stake in the nuclear group Areva. The Financial Times also said in March that the French government was considering opening the share capital of Areva to Middle Eastern investment funds with a view to reinforcing its political influence and the nuclear group’s prospects in the region. Exploratory talks had been held about the possibility of sovereign wealth funds buying minority stakes of 1%-5% in Areva, which is majority owned by the French government, the FT said, citing people close to the matter.”

read more: Business Intelligence Middle East

Wall Street Journal reports, “Areva SA is poised to raise some €1 billion ($1.44 billion) by selling its stake in a French nickel-mining firm, people familiar with the matter said, in what would be the latest move by the French nuclear-power group to raise money for a vast nuclear plant renewal plan and expansion into alternative energies. The state-owned Areva plans to sell its 25.78% stake in Eramet to France’s Fonds Strategique d’Investissement — a sovereign fund created last year by the French government to help strategically important companies — by the end of the first quarter, according to one of the people familiar with the matter. Spokespeople for Areva and Eramet declined to comment.”

read more: Wall Street Journal

According to Bloomberg, “Qatar may join General Electric Co. and CVC Capital Partners Ltd. in their bid to buy Areva SA’s electricity transmission and distribution unit, two people familiar with the matter said.

Qatar Holding LLC, an investment unit of the Persian Gulf country’s sovereign wealth fund, hired New York-based investment bank Evercore Partners Inc. to advise on acquiring a stake in Areva’s unit should the GE-led bid succeed, said the people, who declined to be named because the talks are private. Officials at Doha-based Qatar Holding declined to comment.

Areva, the world’s largest maker of nuclear reactors, received three indicative bids worth less than 4 billion euros ($5.9 billion) for the unit, people close to the sale said last month. The French government, owner of 92 percent of Areva, may decide the division should be sold to a group formed by Alstom SA, the unit’s previous owner, and Schneider Electric SA, to preserve France’s economic interests, analysts have said. Toshiba Corp. also submitted an offer, the people said.

GE Energy spokesman Dan Nelson declined to comment. Officials at Evercore weren’t available to comment.”

read more: Bloomberg

Reuters reports, “France’s FSI strategic investment fund could buy stakes in assets that French nuclear reactor supplier Areva is selling, the fund’s head told Les Echos newspaper.

Asked about Areva’s power Transmission & Distribution (T&D) unit and its minority stakes in mining group Eramet and chipmaker STMicroelectronics, Gilles Michel said, ‘Regarding Eramet, the FSI is obviously one of the possible shareholders, but there are other players. It’s exactly the same answer for STMicroelectronics and for T&D.’

On Wednesday, the FSI raised its stake in Technip, a builder of refineries and pipelines, to 5 percent from 2.6 percent. Michel told Les Echos the FSI spent 90 million euros $130.5 million on the Technip investment.”

read more: Reuters

AFP reports that, “French state-controlled nuclear giant Areva said Tuesday it was opening its capital to new investors and would sell a subsidiary to raise money for massive investments in new nuclear technology.

The company also said it was considering the sale of its stakes in French metal mining group Eramet and Geneva-based computer chip maker STMicroelectronics. The Financial Times reported earlier that the French government was preparing a capital increase and could sell a 15-percent stake to Asian and Middle Eastern investors for two billion euros (2.8 billion dollars).

The FT reported Mitsubishi Heavy Industries (MHI), Areva’s Japanese partner, was set to take a stake in the French company. MHI told AFP it had not received an offer to buy a stake but would study such a proposal. The French government is also in talks with sovereign wealth funds such as Mubadala of Abu Dhabi over their participation in a capital increase, which will be launched later this year, the FT said. France produces most of its electricity from nuclear power and French energy groups like EDF, Total and GDF Suez have previously been touted as possible investors in Areva. The report comes amid growing interest in nuclear power around the world, sparked by fears of climate change, worries about the reliability of supplies from the Middle East and Russia and record high oil prices in 2008.”

read more: AFP