Deals

2 Reasons Why Goldman and ADIA Are Pondering Fluery Deal

brasilBrazil-based Fluery SA, a medical services company, has a market value of nearly US$ 1.2 billion. The Abu Dhabi Investment Authority (ADIA) and Goldman Sachs Group may join Gavea Investimentos Ltda. in a lofty bid to acquire Fluery. The likely investor group would graciously attempt to combine Fluery with Instituto Hermes Pardini Ltda., a closely held medical lab business – creating a healthcare giant. According to the Sovereign Wealth Fund Transaction Database from a July 2014 extraction, in 2013, over US$ 15 billion in direct investment was invested in health care by sovereign wealth funds and public pensions.

1. A Healthcare Giant

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Losing Patience: Qatar Sovereign Wealth May Consider Another Bid on Sainsbury

The Qatar Investment Authority (QIA), a major sovereign wealth investor that has significant assets in the United Kingdom, may make another bid for J Sainsbury plc. Some notable investments in the UK from the QIA include famed-retailer Harrods. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Friday SWFI News Roundup, July 25, 2014

CWCapital Asset Management’s Massive Sale of Distressed CMBS

According to Trepp, LLC, a provider on CMBS data and analytics, the first 5 months of 2014, 431 commercial mortgage-backed security loans adding to US$ 7.7 billion were liquidated with losses. Nearly 70% of the liquidated losses were between February and March. CWCapital Asset Management’s massive sale of distressed assets through CBRE and auction.com accounted for the majority of the liquidation amount.

APG Appoints Philip Neyt as Senior Advisor

Dutch pension provider APG Groep N.V. has appointed Philip Neyt, the former CEO for the pension fund of Belgian telecommunications company Belgacom, to be a senior advisor on the strategy and policy team. The senior advisor role is a new position.

In a press release, Dick Sluimers, CEO at APG, commented that Neyt’s “broad network will strengthen our stakeholder management in Brussels and abroad.”

CIT Buys OneWest Bank

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What if ADIA Took BlackRock Private?

BlackRock NY

The Abu Dhabi Investment Authority (ADIA) is the largest sovereign wealth fund in the Middle East. The sovereign fund has a mandate to invest overseas, utilizing some of the most respected asset managers in the industry. In rare circumstances, sovereign wealth funds and pensions take equity interests in asset management firms. This is a case in point, the China Investment Corporation (CIC) in its investments in the Blackstone Group and Morgan Stanley or the CalPERS firm investment in Silver Lake Partners, a technology-focused private equity company. By investing in asset management firms, public institutional investors are attempting to align the interests of the fund manager with the asset owner.

In addition, indirectly, ADIA would be the biggest manager of third-party capital.

BlackRock is the world’s largest asset manager, climbing above Fidelity, Vanguard and State Street. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Qatar Holding Moves to Sell 5 Percent of LSE Holdings

Qatar Holding, a sovereign wealth enterprise of the Qatar Investment Authority, is planning to sell down its 15% stake in the LSE Group, owner of the London Stock Exchange. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Why Sovereign Funds Use the Cayman Islands for Cross-Border SPVs

Sovereign wealth funds like the Abu Dhabi Investment Authority (ADIA) utilize Cayman Island entities to facilitate cross-border transactions, primarily to North America. The British Overseas Territory in the western Caribbean Sea is a popular offshore jurisdiction, deriving its court system from the English system. The Cayman Islands is not just for hedge funds, insurance companies and Chinese companies seeking to raise capital. For example, Alibaba used the Cayman Islands for its variable interest entity structure.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

BNY Mellon Wins Custodial Mandate from Finland State Pension

BNY Mellon ManhattanValtion Eläkerahasto (VER), the state pension fund of Finland, has appointed BNY Mellon to be the global custodian of the fund. Among other deciding factors, BNY Mellon had the capacity to provide a straight-through processing interface to the fund’s current technology platforms. BNY Mellon has replaced JP Morgan as the custodian.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

CIC Hires AgBank Banking Executive

The China Investment Corporation (CIC) has hired Liu Guiping as an executive vice president according to the sovereign wealth fund’s website. Liu is a former banker at Agricultural Bank of China, who is credited with organizing the “Pretty Mom Credit Card” which is targeted to China’s young moms. The card offers discounts on baby products and early education. Other banks, like China Everbright Bank, have created similar programs targeting mothers in China.

The CIC frequently draws candidates from China’s banking sector. Gao Xiqing, the former president of the CIC, was a “vice chairman and chief executive officer of BOC International, the investment banking arm of Hong Kong’s Bank of China.”

Learn more about the China Investment Corporation

UPDATE: London Stock Exchange to Review Russell Investments

The London Stock Exchange Group (LSEG) is expecting the US$ 2.7 billion deal to acquire Seattle-based Russell Investments to finalize by early next year.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Strategic Irish and Chinese Public Money Create Tech Society

In greater frequency, the government of China has been constructing inroads by developing strategic relationships with the British Isles through roadshows, forums and joint venture agreements. A US$ 100 million fund vehicle backed by public money from Ireland and China, Summit Bridge Capital, has launched a society to bring together Irish and Chinese tech companies. Created in January 2014, the China Ireland Technology Growth Fund, co-managed by Atlantic Bridge Capital and Beijing-based WestSummit Capital, targets Irish and Chinese businesses in core technology sectors. The fund is financially supported by the China Investment Corporation and the Ireland Strategic Investment Fund. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Singapore Sovereign Wealth Centers on Spanish Bank Business

Due to modifications in the regulatory environment on sharper capital allocation, Banco Santander SA wants to exit or restructure low return-on-equity segments. The European team of New York-based Warburg Pincus LLC, a private equity firm, is in charge of a transaction to purchase 50% of Banco Santander’s custody business in Brazil, Mexico and Spain – subject to regulatory approvals. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Are Sophisticated Sovereign Wealth Funds Becoming the Next Crop of Dealmakers?

sovereign wealth fund dealmakers

Sovereign funds represent a large, thriving pool of sophisticated capital. With nearly US$ 7 trillion in institutional investor assets, sovereign wealth funds have flexed their muscles, acquiring luxury hotels to Indian movie production companies. Year over year, more sovereign wealth funds are doing direct deals and participating in co-investments with private equity funds, mega pensions and specialist funds. According to the Sovereign Wealth Fund Transaction Database, leading the charge of recent direct investments are Norway’s Government Pension Fund Global, Temasek Holdings, GIC Private Limited, Qatar Investment Authority, China Investment Corporation and the Abu Dhabi Investment Authority. CEOs and CFOs of major public corporations are increasingly reaching out to sovereign funds and large pensions, enticing them with deals and strategic opportunities. In March, Qatar Holding, the sovereign wealth enterprise of the Qatar Investment Authority, invested capital in a spin-off deal from American Express.

As sovereign funds and large public asset owners augment in-house expertise, the growth of investment pitches continue from private equity funds, banks and companies.

Qatar Investment Authority – Bold Dealmaker

These big-pocketed institutional investors, along with well-staffed pension funds are reshaping the deal making landscape that was once dominated by the mega investment banks and private equity funds. Despite recent headlines of the Qatar Investment Authority (QIA) taking a more conservative approach to investing, the sovereign wealth fund has been hiring former investment bankers and growing large developmental projects globally, such as CityCenterDC and a mixed-use development near the offices at Royal Dutch Shell Plc’s London headquarters.

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LSE Nears Deal with Russell Investments

londonbridge

Public stock exchanges are increasingly acquiring or creating index services to bolster revenue. Index providers generate sales by licensing their indexes to exchanges and money managers. The London Stock Exchange Group (LSE) is soon to acquire Seattle-based Russell Investments in a transaction worth US$ 2.8 billion. The deal could still fall through. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Singapore Sovereign Wealth Pushes Healthcare Allocation with Investment in Philippine Hospital Group

sovereign wealth dealSingapore’s GIC Private Limited announced May 16th it had entered into a definitive partnership agreement with Metro Pacific Investments Corporation (MPIC) to invest PHP 3.7 billion (US$ 84 million) for a 14.4% stake in MPIC’s wholly owned hospital holding company, Neptune Stroika Holdings Inc.

As of March 31, 2013, GIC had 5% of its portfolio invested in Asian countries excluding Japan, China, Hong Kong, South Korea and Taiwan.

The Singapore-based sovereign wealth fund will carry out the investment in Neptune through its private equity division. The deal further stipulates that GIC will purchase an exchangeable bond from MPIC, in which it can opt in for another 25.5% stake in Neptune, for PHP 6.5 billion (US$ 149 million), contingent upon unspecified provisions. MPIC will allocate the bond proceeds to continuing infrastructure investments in roads, water and power. The agreement is expected to be finalized in mid-2014.

“Over the last few years, we have been approached by many parties who have been interested to invest in our hospital business,” said MPIC Hospital Group President and CEO Augie Palisoc Jr. in a press release. “We are happy to select one whom I believe we can work with to grow our business not only in hospitals but also in other health-related fields, both in the Philippines and possibly abroad.”

Makati, Philippines-based Neptune Stroika Holdings owns and operates 8 hospitals: Makati Medical Center, Asian Hospital, Cardinal Santos Medical Center, Our Lady of Lourdes Hospital, De los Santos Medical Center, Davao Doctors Hospital, Riverside Medical Center in Bacolod, and Central Luzon Doctors Hospital in Tarlac. Through a recent acquisition, it also runs a mall-based diagnostic center MegaClinic.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Russian Renewal: RDIF Makes Strides with International Institutional Investors

Sovereign Wealth Funds and Russia

The second to last week of May was momentous for countries in Eastern Europe and Central Asia. The St. Petersburg International Economic Forum was hosted on May 22-24 in Russia. During the conference, the Russian Direct Investment Fund (RDIF) highlighted some significant recent deals and joint ventures. In a continuous strategy to expand foreign investment from non-Western nations, Russia has courted East Asian and Gulf countries. Through money moves and conference speeches, Russia is making a case for institutional investors not to ignore one of the top eight largest economies in the world. For example, the Qatar Investment Authority (QIA) is going to invest US$ 2 billion in Russia through joint investments with the RDIF. In recent times, the RDIF has attracted a slurry of sovereign wealth investors such as Mubadala, the Kuwait Investment Authority, China Investment Corporation, Mumtalakat Holdings, Fondo Strategico Italiano, Korea Investment Corporation and the Abu Dhabi Department of Finance.

The RDIF and Macquarie Russia & CIS Infrastructure Fund (MRIF) signed a MoU to develop a “smart grid” program alongside a Russian power transmission and distribution company, JSC Russian Grids.

May 21st saw the announcement of a landmark deal between Russia and China, in which Russia agreed to a 30-year gas supply contract to China. The Gazprom deal is worth US$ 400 billion. Gazprom generates nearly 80% of its revenue from Europe. This deal will influence the global gas market. Gazprom still needs to build a pipeline to carry 38 billion cubic meters of gas annually to China.

RDIF and Institutional Investor Deal – Buying Ust-Luga LPG Port

A group of investors including the RDIF and Gazprombank have agreed to invest in a liquefied petroleum gas (LPG) and light oil products transshipment terminal. The terminal is owned by Russian gas processor SIBUR and located in the sea port of Ust-Luga on the Baltic Sea. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

POSTING UP: Sovereign Wealth Fund Backs Snapdeal

Not to be confused with Snapchat, Snapdeal is one of India’s largest growing online e-commerce companies. Founded in 2010, in May, Snapdeal has raised US$ 100 million from institutional investors such as Temasek Holdings, BlackRock, Hong Kong-based Myriad, Premji Invest (family office of Wipro founder) and Tybourne Capital Management. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Vasan Healthcare Raises Additional $50 Million from Institutional Investors

Chennai-based Vasan Healthcare has raised US$ 50 million in new growth capital from existing institutional investors. These investors are Singapore’s GIC Private Limited, WestBridge Capital and Sequoia Capital. Vasan Healthcare runs eye care and dental hospitals across India. Singapore’s sovereign wealth fund had already invested US$ 100 million in Vasan Healthcare, while WestBridge Capital and Sequoia Capital invested US$ 50 million together in three rounds of funding.

Vasan Healthcare may go for an initial public offering by 2015.

Increasingly, institutional investors are investing in Indian healthcare companies. The International Finance Corporation (IFC) and ICICI Venture are in key negotiations to acquire a 35% stake in Hyderabad-based Krishna Institute of Medical Sciences.

Temasek Invests in Virgin Mobile Latin America

Singapore’s Temasek Holdings has participated in the US$ 86 million equity capital raise for Virgin Mobile Latin America Inc (VMLA). The capital will be used to fund expansion in Brazil and Mexico. Founded in 2010, VMLA’s shareholders include billionaire Richard Branson’s Virgin Group. There are over half billion wireless consumers across Latin America.

“The proceeds of these financings will be used to launch the Virgin Mobile brand in Mexico in 2014 and Brazil in 2015, and to fund further growth and expansion opportunities as they arise in the region, including the company’s existing operations in Chile and Colombia,” VMLA said in a statement.

In addition, VMLA is expanding its debt facility reaching US$ 41.5 million through efforts by the International Finance Corporation (IFC) and the Central American Mezzanine Investment Fund II, an IFC vehicle. On December 18, 2012, VMLA closed a debt funding agreement with the IFC, to fund Virgin Mobile Colombia.

See The 15 Investors Backing CITIC Pacific Limited

CITIC Pacific Limited is purchasing the assets of its parent company, state-owned CITIC Group Corp. CITIC Pacific mentioned in April that it was raising funds to acquire its parent for around US$ 37 billion. To fund the deal, CITIC Pacific is selling US$ 5.1 billion worth of shares.

15 Investors in CITIC Pacific Limited

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QIA Buys Half of Qatar Airways, Pushes Out Private Investors

Qatar Investment Authority acquired an approximately 50% stake in Qatar Airways last July, the airline’s CEO Akbar Al Baker told reporters on Monday. The Doha-based sovereign wealth fund bought out all of the company’s private investors, including former Prime Minister Sheikh Hamad bin Jassim al-Thani, bringing Qatar Airways under full government ownership.

The motivation behind the buyout is to foster fairness and competition in Qatari markets by decreasing the amount of direct investments held by members of the ruling family such as Sheikh Hamad, a government source told Reuters. The amount paid out to the former prime minister and the other shareholders has not been disclosed.

As a state-owned entity, Qatar Airways will begin announcing financial results, starting with the release of a 2013 financial report later this year. The company had over US$ 10 billion in revenue for 2013.