Sovereign Wealth Fund Institute

An investment consortium led by CITIC Capital Partners is going to buy Asiainfo-Linkage Inc. for about US$ 890 million. U.S.-listed Asiainfo-Linkage Inc provides software to telecommunication companies with big clients such as China Unicom, China Telecom and China Mobile. Using Ellington Investments Pte. Ltd., Singapore’s Temasek Holdings is part of the consortium of investors. Other consortium members include China Broadband Capital Partners II, L.P. and Edward Tian, co-founder and a significant stockholder of the Asiainfo-Linkage Inc.

The consortium has agreed to pay US$ 12 per share for the company.

Morgan Stanley was the lead financial advisor for CITIC Capital. Other advisors for buyers include Nomura International, ICBC International Capital Ltd and China Renaissance Holdings Ltd.

Bank of Taiwan, Cathay United Bank, Co., LTD., ICBC International Capital Limited, Maybank Investment Bank Berhad and Nomura International (Hong Kong) Limited have agreed as mandated lead arrangers to arrange a debt facility in the aggregate amount of US$330 million to provide debt financing for the acquisition.

Doha Global Investment Co., the investment company partially-backed by Qatar Holding LLC, has postponed their initial public offering on the Qatar Exchange to a new date. The investment company plans to manage $12 billion in assets, in which $3 billion of assets will be transferred from Qatar Holding into the new entity. The new vehicle will invest in assets such as equities, real estate and direct investment in companies. The government of Qatar is attempting to use Qatar Holding’s investment platform and create a similar entity, so the Qatari citizens can partake in international investments under the government umbrella.

Hussein Ali al-Abdullah, acting chairman of both Qatar Holding and the bourse, said in a statement that the IPO has been postponed “until all requirements and approvals from the concerned authorities are obtained.”

Only citizens, companies and institutions in Qatar can invest in the IPO. Credit Suisse is the advisor on the IPO for Doha Global Investment.

State-owned China Galaxy Securities Co., Ltd. is mainland China’s sixth largest brokerage company by revenue. Capital market conditions seemed to have improved since 2012, and the company desires to grow their margin financing business.

China Galaxy Securities is backed by Central Huijin Investment Ltd., a sovereign wealth enterprise (SWE) of the China Investment Corporation (CIC). [Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

Singapore’s Temasek Holdings is positioned to purchase a stake worth around US$ 500 million in Markit Group Limited. Temasek’s potential stake would reduce the banks’ stake. Founded in 2001 by Lance Uggla and a group of executives, Markit is a data provider based in the United Kingdom. Among other products and services like trade processing, the private company provides data on prices and valuations of privately-traded credit derivatives.

In 2005, Markit opened an office in Singapore.

In July 2012, they spearheaded a bond pricing service for the Singapore dollar bond market. This was in response to the Monetary Authority of Singapore’s desire to expand and deepen Singapore’s debt capital market.

Markit is contemplating capital raising options like a potential initial public offering. In January 2010, General Atlantic Partners parked US$ 250 million for a 7.5% stake, valuing the company at the time to be US$ 3 billion. The capital has allowed Markit to acquire companies, expand products and reach new markets.

The Government of Singapore Investment Corporation (GIC) is preparing the sale of Glencore Guaranteed Convertible Bonds worth US$ 250 million. Due in 2014, the 5% convertible bonds were issued by Glencore Finance. Singapore’s GIC plans to use the sales proceeds to purchase ordinary shares of Glencore International.

Singapore’s GIC was an early investor in Glencore’s convertible bonds. These bonds predated Glencore’s initial public offering in 2011.

Morgan Stanley is acting as the key manager and bookrunner for the bond offering.

Le Fonds Strategique d’Investissement (FSI), France’s strategic development sovereign wealth fund, purchased a stake in Technicolor SA, formerly Thomson SA. The investment was made to support the company’s plan to trim debt and augment cash flow by 2015. It is implied the FSI purchased a 1.2% stake. Technicolor SA is a 1.4 billion dollar market cap company in which Vector Capital is its largest shareholder.

Russia’s second biggest lender, state-run VTB Group, is raising nearly 102.5 billion roubles (US$ 3.3 billion) in a share sale. VTB Group plans to sell 2.5 trillion new shares. With regard to sovereign fund investment, included are Norges Bank Investment Management (NBIM), the State Oil Fund of Azerbaijan (SOFAZ) and Qatar Holding LLC. The government of Russia owns 75.5% of VTB Group’s shares according to a company report. In addition, the government of Russia waived their right to subscribe in the offering, a sign to investors of their intent of cautious privatization. The stake may be reduced down to 60.9% as a result of the share sale occurring.

The consumer credit market is augmenting in Russia and VTB Group desires an increased presence in retail lending. The raised funds will also lift the group’s capacity adequacy levels after large acquisitions like OAO Bank of Moscow and OAO TransCreditBank.

Qatar’s Hassad Food Co completed their first food investment in India by investing over US$ 100 million in a majority stake in Bush Foods Overseas Pvt. Ltd. The cross-border transaction was finalized in Doha, Qatar. Founded in 1992, Bush Foods Overseas is a privately-owned basmati rice seller with flagship brands such as Neesa, Himalayan Crown and Indian Star. Created in 2008, Hassad Food is a sovereign wealth enterprise (SWE) of the Qatar Investment Authority (QIA). Over the next three to five years, Hassad Food plans to allocate US$ 500 million in food businesses in India.

QInvest and Ambit were financial advisors to Hassad Food.

The press release, “Allianz and Borealis Infrastructure have reached an agreement with RWE AG to purchase Net4Gas, s.r.o. (N4G), the gas transmission and transit system operator in the Czech Republic.

Allianz and Borealis Infrastructure, the infrastructure investment arm of the Ontario Municipal Employees Retirement System (OMERS), will each own a 50 percent stake in N4G.

N4G owns and operates a network of more than 3,600 km of high-pressure pipelines that supply the Czech domestic market and that transit natural gas through the Czech Republic to markets across Europe. N4G is a provider of key infrastructure for the transport of gas in Europe, transporting approximately 35 billion cubic meters of gas each year.

“We are pleased to be investing in Net4Gas with its excellent management team, workforce and high-quality operations. It fits well with Allianz’s infrastructure portfolio and investment strategy as a long-term investor,” said Rainer Husmann, CEO of Allianz Capital Partners, the captive asset manager of Allianz. “Furthermore, this is an important step for us in expanding our portfolio of high-quality infrastructure assets.”

“The Net4Gas investment fits very well with Borealis Infrastructure’s strategy of owning and managing high-quality, large-scale assets that generate sustainable cash flow to pay pensions,” said Michael Rolland, President and CEO of Borealis Infrastructure. “This acquisition expands our European investment portfolio which includes gas distribution and transportation sector investments in Associated British Ports, HS1 and Scotia Gas Networks.”

A key objective of the consortium’s gas infrastructure strategy is the creation of a gas market that is integrated and liquid. Such market integration would contribute to securing energy supplies which should benefit regional economies, their respective consumers and the N4G network users.”

Read more: OMERS Press Release

The Ontario Teachers’ Pension Plan (OTPP) reached an agreement to acquire 70% of three Australian telecommunications companies from Leighton Holdings Limited. Sydney-based Leighton Holdings Limited will retain a 30% interest in the companies. The companies to be acquired are Nextgen Networks, Metronode and Infoplex. A 100% valuation of all three companies put the total value at 885 million AUD. The deal is expected to close by mid-2013 and is subject to the Australian Foreign Investment Review Board.

For the first quarter of 2013, sovereign wealth funds have come out strong investing directly in energy and utility investments. Direct transaction data for the first quarter of 2013 is not fully complete; the total so far for the first quarter of 2013 is US$ 2.98 billion. Already the direct transaction amount for this quarter is greater than fourth quarter 2012’s total of US$ 810 million. This is the highest quarterly transaction total in the energy and utility sector since the first quarter of 2012 which amounted to US$ 4.37 billion.

Sovereign fund direct investments in energy tend to be opportunistic such as investing in distressed situations.

Singapore’s Temasek Holdings investment in Spain-based Repsol SA represented a significant portion of the deal value total. Other influencing direct transactions include the Kuwait Investment Office and the Government of Singapore Investment Corporation making large market purchases in National Grid Plc. Non-commodity sovereign funds have increased allocation to energy and utility sectors. Commodity-based sovereign funds are double exposed to resource prices.

Direct Sovereign Wealth Fund Transactions

Source: Sovereign Wealth Fund Transaction Database

Learn more: Sovereign Wealth Fund Transaction Database

A sovereign wealth enterprise (SWE) of the Government of Singapore Investment Corporation Pte Ltd (GIC) is making a £100 million investment in Greenko Mauritius Ltd, a subsidiary of Greenko Group plc. The £100 million investment will turn into regular Greenko shares between 2015 and 2017. Greenko’s capital infusion will accelerate construction of the firm’s renewable power portfolio in India. Projects include utility scale wind farms and Himalayan run-of-river hydro projects. The GIC’s infrastructure portfolio targets minority equity stakes in power generation, transmission and distribution, water utilities, and also in transport assets such as airports, seaports and highways.

In a press release, Greenko’s chief executive officer, Anil Chalamalasetty stated, “This shows great confidence in Greenko’s business model and its opportunity in the Indian power market. GIC’s infrastructure investment capability will be a great addition to the platform.”

Arden Partners plc and Macquarie Capital Advisers (India) Pvt Ltd were advisers to Greenko for the transaction.

Malaysia’s Khazanah Nasional Berhad looks to purchase General Electric Co’s US$ 1.8 billion stake in Bank of Ayudhya Public Company Limited, the fifth largest lender in Thailand. General Electric’s 25.3% stake in the bank has also attracted Mitsubishi UFJ Financial Group. Khazanah Nasional isn’t nearly active in pursuing international financial sector investments compared to Singapore’s Temasek Holdings. A major insurance purchase, Khazanah Nasional and Sun Life Financial Inc bought a 98% stake in an insurance joint venture between CIMB and Aviva Plc.[Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

Evonik Industries AG, a German specialty chemical manufacturer, sold a block of shares to Temasek Holdings in a 4.6% private placement deal. Temasek Holdings will pay around €600 million for the stake. Evonik is preparing to be a listed company on the Frankfurt Stock Exchange; however, the firm has encountered setbacks due to lackluster market conditions.

In 2008, buyout firm CVC Capital purchased a stake in Evonik. CVC Capital had controlled 25% of Evonik, while the rest was owned by the RAG foundation. In February 2013, both owners reduced their stakes selling about 4% each to a group of investors.

On another note, Temasek Holdings bought a stake in Bangalore-based Healthcare Global Enterprises, an Indian provider of cancer healthcare, for 32.5 million SGD. Healthcare Global Enterprises maintains 26 healthcare centers in Asia. Temasek Holdings joins existing investors such as Premji Invest and Milestone Religare. Evolvence India Life Sciences Fund, an early investor, will be exiting their investment to Temasek Holdings.

The Government of Singapore Investment Corporation (GIC) increased liquidity in their portfolio by selling 596.674 million shares of Global Logistic Properties (GLP). This would raise about 1.5 billion SGD.

Global Logistic Properties is a SGX listed company which is majority-owned by the GIC. The property company is the largest owner of industrial properties in Japan and has significant holdings in China and Brazil.

Singapore’s GIC will maintain a 37% stake in Global Logistic Properties, down from 49%.
The real estate company listed on the Singapore Exchange in October 2010 raising around 3.5 billion SGD.

According to the press release, “Talison Lithium Limited is pleased to provide an update on the status of the transaction with Chengdu Tianqi Industry (Group) Co., Ltd and its subsidiary Windfield Holdings Pty Ltd (“Windfield”) (together “Tianqi”).

On December 6, 2012, Talison announced that it had executed a Scheme Implementation Agreement (the “SIA”) with Tianqi under which it is proposed that Windfield, or a wholly-owned entity of Windfield, will acquire the balance of the ordinary shares that it does not already own and options in Talison by way of schemes of arrangement (“Tianqi Schemes”) for cash consideration of C$7.50 per Share. This values the equity of Talison at approximately C$848 million on a fully diluted basis.

On December 19, 2012, the Federal Court of Australia ordered the convening of meetings of Talison Securityholders to consider the Tianqi Schemes (“Scheme Meetings”) to commence at 10:00am on February 27, 2013. The Scheme Booklet, which is available on SEDAR and on Talison’s website, was mailed to Talison Securityholders on or about February 5, 2013.

Under the SIA, Tianqi was given until 5:00pm (Perth time) today (February 25, 2013) to provide documentary evidence that reasonably demonstrates the availability to Windfield of the funding required to complete the transaction with Talison.

Talison confirms that Tianqi has provided the necessary documentary evidence in connection with its funding arrangements which are as follows:

• Tianqi and Windfield have entered into agreements with Leader Investment Corporation (“Leader”), a subsidiary of China Investment Corporation (“CIC”) under which CIC, through Leader, has committed to fund Windfield with approximately C$300 million of long term equity in exchange for an approximately 35%, non-controlling equity interest in Windfield to support the Transaction. CIC has received formal advice from Australia’s Foreign Investment Review Board that the Australian Government has no objections to CIC’s investment in Windfield through Leader.
• Tianqi, and one of its wholly owned subsidiaries, have also entered into loan agreements for US$200m from Credit Suisse AG, US$120m from Industrial and Commercial Bank of China Ltd and US$50m from Twenty Two Dragons Ltd (a company owned by ADM Capital). The funding arrangements outlined above remain subject to the satisfaction of a number of conditions precedent to drawdown. Tianqi has advised Talison that it expects each of these conditions (other than those that relate to implementation of the Tianqi Schemes) to be satisfied prior to the second court hearing scheduled for March 12, 2013.

Tianqi currently holds approximately 19.9% of the issued share capital of Talison. The funding arrangements outlined above, together with the US$25 million deposit previously paid by Tianqi, are sufficient to fund Tianqi’s obligation to purchase the remaining approximately 80% of Talison Shares and Options under the Tianqi Schemes.”

Read more: Press Release

Qatar Holding LLC, a sovereign wealth enterprise of the Qatar Investment Authority (QIA), plans to create an investment company called Doha Global Investment worth US$ 12 billion to buy assets internationally. The company would be listed on the Doha Exchange within six to eight weeks. The listed company would have billions in riyals in paid-up capital with half originating from Qatar Holding. The rest of the funds will be raised privately. The initial public offering will be open to Qatari nationals only, later to foreign investors when listed. Qatar has the highest per capita income in the world.

Increasingly, sovereign funds are creating quasi-independent investment platforms, many soliciting external capital to take advantage of their entity competitive advantages.

Given part of Doha Global Investment will be owned privately, the future listed company will be presented opportunities by Qatar Holding, but will have its own final say on decisions and investments.

On February 19, 2013, Hussain al-Abdullah, Vice Chairman of Qatar Holding told reporters in Doha, “You name it – shares, bonds, real estate, private equity. We will look at every sector in every country around the world.”

In recent times, Qatar Holding with Credit Suisse AG agreed to create an asset manager called Aventicum Capital that will target assets in emerging markets.

Chinese governmental investors have allocated capital to invest in European companies. The government of China is encouraging more overseas transactions, with Chinese state banks financing deals. Two major impediments arise, one is knowing how and where to access such investment opportunities, and the other is political risk. Chinese state-owned enterprises and corporations have ventured into Europe, purchasing direct stakes into companies. On the other side, small to medium European companies are encountering obstacles getting credit from banks for business expansion and refinancing of debt. In addition, European companies want greater access to the Asian market, particularly China.[Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

Russia has aspiring plans to privatize state-owned businesses and draw foreign capital to Moscow. Russia’s central bank currently owns 24.3% of the exchange.

Investors have bid for all shares offered by the Moscow Exchange MICEX-RTS. The Russian Direct Investment Fund (RDIF) and the sovereign wealth enterprise, Chengdong Investment Corporation which is owned by the China Investment Corporation (CIC) shored up demand. The CIC may end up with up to 25% of the shares being offered in the IPO.

The Moscow Exchange plans to use some of the IPO proceeds to boost the capital of the National Clearing Center and upgrade its trading system.

It is rumored the Qatar Investment Authority may inject capital into VTB, Russia’s number two bank.

Samruk-Kazyna has taken a 29% stake in Kazzinc, a Glencore-controlled zinc producer, for an undisclosed price. Glencore International AG owns 69.61% of Kazzinc. The shares were purchased from Verny Capital JSC, a private equity company.

Founded in 1997, Kazzinc was founded by the merger of Eastern Kazakhstan’s three core non-ferrous metal companies which were owned by the government of Kazakhstan. The controlling block of shares of Kazzinc was sold to Glencore International AG and to other private sector shareholders back then.