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Deals

AIMCo Sells Major Stake in Town Shoes to DSW

Ohio-based DSW Inc. is purchasing a 44% interest in Town Shoes Limited, the biggest Canadian footwear and accessories retailer. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Mubadala Seeks to Raise Eurobond Issue for 2014

Abu Dhabi-based Mubadala Development Co. hired six banks to handle a new potential Eurobond issue. These banks include, Bank of America Merrill Lynch, Credit Agricole CIB, Deutsche Bank, Goldman Sachs, HSBC and National Bank of Abu Dhabi. The potential offering allows Mubadala flexibility in its capital structure.

In 2011, Mubadala tested capital markets, successfully raising money. Many fixed income investors who invest in Gulf debt are familiar with the Mubadala name. In 2009, Mubadala created a dual-tranche US$ 1.75 billion issue.

If Size Matters, Financial Sector Most Attractive for Sovereign Wealth Funds Between 2007 to 2013

sovereign wealth fund sector deals

Source: Sovereign Wealth Fund Transaction Database, April 2014, Billions USD

In the past decade, sovereign wealth funds produced major strides when it comes to direct investing. From the start of 2007, till the end of 2013, the top three sectors for direct sovereign wealth fund investment were financials, real estate and energy. The 2007 banking bailouts are still major contributors to the financial sector aggregate figure.

Gazing forward, 2014 and 2015 are projected to be very active years for the asset-bulky sovereign wealth funds in direct investing.

According to the proprietary Sovereign Wealth Fund Transaction Database, the financial sector led the pack with over US$ 206 billion transactions recorded from 2007 till the end of 2013. Institutional real estate totaled US$ 83.1 billion, a dramatic jump from the 2005 to 2011 figure of US$ 54.5 billion. Norway’s Government Pension Fund Global (GPFG), Singapore’s GIC Private Limited and the Abu Dhabi Investment Authority were some major sovereign wealth fund investors in properties globally.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Mid-April 2014 Sovereign Wealth Fund Deal Watch

shanghai

Paris-based Bouygues S.A., France’s #3 cell phone provider, is trying to acquire Vivdeni’s SFR mobile unit. Luxembourg-based Altice, a telecom company, wants SFR as well. SFR is the number #2 cell phone provider in France. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Northern Australia Builds Ties to the Gulf via Sandalwood

The government of Australia’s Northern Territory announced early last month it had engaged in confidential discussions with a Middle Eastern sovereign wealth fund regarding “significant investment in major Northern Territory infrastructure projects.” [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Sovereign Wealth Money Flows into Morocco Tourism

casablanca

Al-Ajial Investment Fund, a subsidiary of Al-Ajial Holdings is investing €400 million in the Wessal Capital Gulf-Morocco venture. The Kuwait Investment Authority created the Al-Ajial Investment Fund in 2006 to target growth areas in Morocco. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Omantel Partial Divestment to Fill SGRF’s Coffers

State-owned Oman Telecommunications (Omantel) is being partially sold off by the government of Oman. The proceeds of the sale will go to the Oman State General Reserve Fund, one of Oman’s sovereign wealth funds. The government hopes to raise 203.85 million OMR (US$ 528 million) for the 19% stake up for sale. The Omantel deal is being drawn up in two phases. The first phase is a private placement of 71.25 million shares. The second phase is a public offer.

The partial privatization would bring government ownership down to 51% from 70%.

Mobile Revenue Share

  • Omantel Mobile – 63.8%
  • Nawras – 36.2%

Source: Omantel Presentation – June 2013

Temasek Invests in India-based StarAgri

Singapore’s Temasek Holdings is investing 2.4 Billion INR (US$ 40 million) in India-based Star Agriwarehousing and Collateral Management Limited (StarAgri) for a minority stake. StarAgri started in Rajasthan, the largest state in India by land. The company focuses on agricultural commodities providing warehousing, logistical services and collateral management.

StarAgri was founded in 2004 by Suresh Goyal, Amit Mundawala, Amith Agarwal and Amit Khandelwal.

In December 2012, Temasek Holdings invested 5.72 billion INR for a 19.9% stake in Godrej Agrovet Limited, a subsidiary of Godrej Industries. Godrej Agrovet Limited is an India-based agri-business.

RDIF and Eastern Institutional Investors Target Ag Firm Sodrugestvo

The Russian Direct Investment Fund (RDIF) with its group of institutional investors from the Middle East and China are investing in Sodrugestvo Group SA for a US$ 200 million stake. Incorporated in Luxembourg, Sodrugestvo is an agricultural processor and trader, generating US$ 2 billion in revenue in 2013.

Founded in 1994, Sodrugestvo is the biggest supplier of soybean meal in Russia. Sodrugestvo operates crushing plants in Kaliningrad Oblast. The company has a number of verticals which include a port infrastructure business, rapeseed processing, trading agricultural commodities and warehousing.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

China’s Sovereign Fund to Acquire $40 Million Stake in iKang

The China Investment Corporation (CIC) is acquiring a 40% stake in iKang Healthcare Group Inc for US$ 40 million through Best Investment Corporation. Beijing-based iKang is a private healthcare provider that focuses on preventative care. The CIC is purchasing the shares at the initial public offering price.

iKang is looking to raise around US$ 150 million in its IPO on the Nasdaq. Bank of America Merrill Lynch and UBS AG are in charge of the share sale.

On April 12, 2013, GIC Private Limited and Goldman Sachs invested US$ 100 million into iKang.

Temasek Makes Mega Overseas Bet in A.S. Watson

Singapore’s Temasek Holdings is spending 44 billion HKD (US$ 5.7 billion) for a 24.95% stake in A.S. Watson & Co., the retail arm of Hutchison Whampoa Ltd. The deal permits a higher valuation for A.S. Watson’s assets and augments Temasek’s exposure to consumer retail.

A.S. Watson is the biggest international health and beauty retailer.

According to a press release, Chia Song Hwee, head of investment group in Temasek said, “We are very pleased with the opportunity to be a long term partner with Hutchison Whampoa Limited through our investment in A.S. Watson. We share their philosophy to invest and build businesses for the long term, especially in Asia. A.S. Watson is a well-established company with a proven management team, a valuable franchise and a good growth story. The consumer retail sector is a good proxy to growing middle income populations and transforming economies. This is very much part of our investment themes as we shape Temasek’s portfolio for the long term.”

Hutchison Whampoa is controlled by Li Ka-shing, the richest man in Asia. In 1981, Hutchison Whampoa took full control of A.S. Watson.

What Do AMEX and a Sovereign Wealth Fund Have in Common?

Certares LP, Macquarie Capital, funds managed by Blackrock Inc and the Qatar Investment Authority (Qatar Holding LLC) are committing US$ 900 million to a business travel joint venture being spun off by New York-based American Express. The Qatar-based sovereign wealth fund will have a larger stake in the joint venture than the other investors. American Express is selling 50% of its business travel division.

The business travel division faces tough competition from online travel management companies such as Expedia and Priceline.

American Express is in a challenging environment with tighter business travel budgets globally and wants to use the cash toward higher growth areas. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Temasek to Own Company That Handles 12.5% of Cocoa Destined for Chocolate Bars

On March 14, Breedens Investments Pte. Ltd., a sovereign wealth enterprise of Singapore’s Temasek Holdings, made a conditional cash offer for Olam International Limited, a publicly-traded commodities trading firm. The buyer is looking to put up S$5.3 billion (US$ 4.19 billion) to acquire the remaining interests in Olam including outstanding bonds and warrants. The firm trades in a number of commodities which include, cashew nuts, cocoa, coffee, cotton and rice. 1 out of 8 chocolate bars consumed globally are made from cocoa beans handled by Olam.

Olam appeared to be an ideal portfolio company for Temasek Holdings. The agricultural trader was tied into emerging markets and commodities. Olam eventually moved its headquarters to Singapore from London.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Why NBIM’s F1 Investment Might Only Be a Pit Stop

Yngve Slyngstad, CEO of NBIM

Yngve Slyngstad, CEO of NBIM

The Norwegian Government Pension Fund Global (GPFG) is under scrutiny for its US$ 300 million stake in Formula One, an investment which Yngve Slyngstad, CEO of Norges Bank Investment Management, told Norwegian newspaper Dagens Naeringsliv was an unfortunate mistake. His buyer’s remorse follows investigations into the allegedly corrupt practices of Formula One CEO Bernie Ecclestone.

The F1 investment makes up 0.036% of the sovereign wealth fund’s total portfolio.

“We have zero tolerance for corruption,” Slyngstad told Dagens Naeringsliv on Tuesday. “We have full confidence that the board is dealing with this. It is clear that if this case is not handled properly, then we would not want to be an owner. In this case, we would not sit on these shares.”

[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

New Zealand Superannuation Fund Sells 2.5% Stake of Kaingaroa Timberlands to Iwi

The New Zealand Superannuation Fund (NZSF) has sold a 2.5% stake in Kaingaroa Timberlands, New Zealand’s largest forestry business, to six central North Island iwi. Effectively, the NZSF reduces its forest business stake from 41.25% to 38.75%. Other institutional investors in Kaingaroa Timberlands include Canada’s Public Sector Pension Investment Board and the Harvard Management Company, the manager of Harvard University’s endowment. The six iwi representative organizations, Ngati Rangitihi, Ngati Whakaue Assets and Te Arawa River Iwi Limited Partnership, Ngati Whare, Raukawa, Te Arawa Group Holdings Limited and Tuwharetoa, have formed Kakano Investment Limited Partnership to acquire and hold the stake.

An iwi is a social unit in Māori culture.

In 2008, in the biggest Treaty settlement to date, the Crown returned 176,000 hectares of land to the central North island iwi. 90% of Kaingaroa Timberlands tree crop is on returned land.

The CEO of the New Zealand Superannuation Fund (NZSF) mentioned in a press release that there is a strategic benefit for the landowners of the forest to have a stake in Kaingaroa Timberlands.

EQT Consortium to Acquire I-MED

Sweden-based EQT Holdings AB, Caisse de dépôt et placement du Québec and the Singapore sovereign wealth fund GIC Private Limited are purchasing I-MED, Australia’s largest radiology provider for A$ 400 million. EQT is a Swedish private equity firm founded by the Wallenberger family. EQT approached I-MED in November 2013 after the company refinanced US$ 240 million worth of debt through local banks and Morgan Stanley.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Temasek Eyes Selling Shin Corp Stake to SingTel

Singapore’s Temasek Holdings is exploring a sale of its US$ 3.1 billion stake in Thailand telecommunications company Shin Corp. Temasek Holdings, through a sovereign wealth enterprise called Aspen Holdings, owns 41.6% of Shin Corp. SingTel is majority-owned by Temasek and may be a possible suitor for the Shin Corp interest. Strategically, Temasek wants to consolidate portfolio companies by industry group to help achieve efficiencies.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

ADIA Endures Fight for Lost Billions in Citigroup Investment

The Abu Dhabi Investment Authority (ADIA) is exhausting all legal options to recover its loss from the US$ 7.5 billion Citigroup investment. In court, Second Circuit Judge Gerard Lynch was hearing arguments. David Elsberg of Quinn Emanuel Urquhart & Sullivan LLP and other lawyers from the firm are representing ADIA. Judge Gerard Lynch cited Elsberg of making “petty arguments” in a bid to restart ADIA’s suit against Citigroup. Elsberg argued the arbitration panel incorrectly applied New York law with regard to the dispute versus the laws of Abu Dhabi.

ADIA contended they were induced to make the Citigroup investment based on Citigroup’s “fraudulent misrepresentations” to ADIA.

ADIA’s Capital Infusion

ADIA defied surrendering on their US$ 7.5 billion investment in Citigroup that was made in 2007. Rewind the clock back to 2007, Citigroup was in need of a capital infusion – facing disastrous write-downs on their balance sheet. Citigroup’s king dealmaker, Michael Klein, was the chairman and co-CEO of Citi Markets and Banking. Klein had rooted relationships in the Middle East. He was groomed for the CEO position and negotiated the capital infusion Abu Dhabi’s largest sovereign wealth fund. To ink the deal, former Treasury Secretary under President Bill Clinton, Robert Rubin who became Citigroup’s chairman, took a flight to Abu Dhabi to finalize it. Rubin felt ADIA was a good choice, since Citigroup could only find a small number of institutional investors capable of making the investment on their own.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Temasek Invests in 7th Round for Chinese Online Retailer Vancl

Vancl Website Feb 2014

Credit: Vancl Website Screenshot – Feb 2014

Online consumer retailers have attracted sovereign wealth fund capital. On December 31, 2013, Qatar Holding, a sovereign wealth enterprise of the Qatar Investment Authority, acquired a stake in Vente-Privée, a European online company selling discounted branded products. In Asia, Singapore’s Temasek Holdings, along with Ceyuan Ventures, IDG Capital Partners and SAIF Partners invested US$ 100 million in Chinese Online Retailer Vancl in February. This was the seventh investment round for Vancl.

Beijing-based Vancl sells branded consumer products under its own name. The online retailer sells directly to consumers. The company was founded in 2007 by entrepreneur Chen Nian, initially offering primarily low-cost t-shirts and menswear online. Nian founded Joyo, a business-to-consumer retailer that Amazon bought for US$ 75 million.

Initially in 2010, Vancl raised US$ 140 million from a combination of venture capital and angel money. In July 2011, Vancl raised US$ 230 million in a Series F round from CITIC PE, Temasek Holdings, IDG Capital Partners, Hotung Venture Group and Tiger Global Management. At this time, Vancl had 10 million paying customers; however, Vancl started to run into cash flow issues. In 2011, the online retailer had estimated losses of 600 million yuan. Over time, they had trouble paying their suppliers. In November 2013, Vancl raised US$ 100 million in another tranche.

According to Nian in Chinese media news reports, Vancl wants to eventually have an initial public offering.

Nigerian Sovereign Wealth Receives $550 Million from Government

The Nigerian Sovereign Investment Authority (NSIA) has received US$ 550 million from the government of Nigeria. Nigeria is sub-Saharan Africa’s top oil producer. The amount was raised from proceeds of a Eurobond flotation in 2013. The current total assets under management for Nigeria’s sovereign wealth authority is US$ 1.55 billion.

On July 3, 2013, the government of Nigeria raised US$ 1 billion in the Eurobond market – the issue was 4x oversubscribed. The two bonds were a 5-year at US$ 500 million and a 10-year at US$ 500 million.

The US$ 550 million amount has already been allocated. US$ 200 million will be utilized for financing investments in gas-fired energy. The remaining, US$ 350 million, will be allocated to a facility to guarantee payments to electricity providers to assist in privatization efforts.

In May 2011, the Nigerian Sovereign Investment Authority was inked into law by Nigerian President Goodluck Jonathan.