Sovereign Wealth Fund Institute

BOC Fullerton Community Bank is a joint venture between the Bank of China Ltd and Fullerton Financial Holdings. Fullerton Financial Holdings is a sovereign wealth enterprise of Temasek Holdings. Temasek and other sovereign wealth funds are investing in the Chinese financial sector as the middle class continues to grow in China. The joint venture is planning to create 20 to 30 rural banks. According to senior executives this will occur before the end of 2011.

The Chinese banking industry is expanding access to capital for rural communities. Loans are for small business owners, medium-sized enterprises, farmers, and individuals. Each rural bank is operating under the BOC Fullerton Community Bank banner but is fully independent.

On March 4, 2011, the first community bank opened under the JV banner. It was in Qichun county which has just under 1 million people. It had registered capital of RMB 30 million.

The China Investment Corporation plans to purchase a 7% stake in the Bank of Shanghai. The International Finance Corporation (IFC) which is a member of the World Bank Group is selling the stake. The IFC became a shareholder of the Bank of Shanghai in 1999. They made an initial investment of US$ 22 million for a 5% stake. This was then followed up by taking part in a rights issue in 2000. [Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

The press release states, “as a first milestone of this cooperation, advanced exclusive talks on a €2.3 billion minority investment by CIC in the Exploration & Production division of GDF SUEZ to accelerate the development and on the €0.6 billion acquisition by CIC of a 10% stake in the LNG Atlantic liquefaction plant in Trinidad and Tobago.

GDF SUEZ and China Investment Corporation (“CIC”) have signed a Memorandum of Understanding (“MoU”) for cooperation across multiple businesses and regions, in particular in Asia Pacific. GDF SUEZ and CIC will cooperate on a non-exclusive basis to help accelerate their respective strategies by exploring areas of cooperation and co-investment opportunities. The MoU will be deployed across GDF SUEZ Group’s businesses (gas, power, water and waste, and energy efficiency services) and sets up the framework for cooperation in three areas:

(i) joint investment opportunities in existing and new energy-related projects in Asia Pacific;

(ii) financing cooperation in new projects in Asia Pacific;

and (iii) commercial sponsorship and support to GDF SUEZ in Asia Pacific region, including China, by CIC’s affiliates.

The MoU will be administered through a Steering Committee chaired by the two groups’ respective CEOs.

As the first milestone of this cooperation, CIC is in advanced exclusive talks with GDF SUEZ regarding a €2.3 billion minority investment in the Exploration & Production division of GDF SUEZ (“GDF SUEZ E&P”) (excluding the 22.5% equity stake in E.F. Oil and Gas Limited (“EFOG”)). CIC will own 30% of GDF SUEZ E&P, following a capital increase and a financial restructuring of GDF SUEZ E&P reducing its net financial debt to €0.7 billion.

The minority investment of CIC will reinforce GDF SUEZ E&P’s capital structure and will contribute to accelerate the development of this important activity for GDF SUEZ by providing the appropriate financial flexibility. Initiated in the 1990s via acquisitions followed by strong organic development, GDF SUEZ E&P has 2P reserves of 815 mmboe at the end of 2010, an annual production of 51 mmboe in 2010 and a significant portfolio of contingent resources and exploration prospects. With more than 1,500 employees in 13 countries, it generated €2.2 billion of revenues and €1.4 billion of EBITDA in 2010. The transaction values GDF SUEZ E&P (excluding EFOG) at c. €8.1 billion in enterprise value.

As part of the transaction, CIC would also acquire from GDF SUEZ a 10% stake in the train 1 of the Atlantic LNG liquefaction plant located in Trinidad and Tobago as well as production payments associated with trains 2, 3 and 4 for an amount of €0.6 billion.

The potential acquisition by CIC of a 30% stake in GDF SUEZ E&P and of its 10% stake in the LNG Atlantic liquefaction plant is part of GDF SUEZ’s portfolio optimization program of €10 billion, announced at the 2010 annual results presentation and would result in net cash proceeds of €2.9 billion. The transaction will be subject to condition precedents being satisfied and will be presented for consultation to GDF SUEZ’s employee representative bodies. The transaction could be finalized by the end of 2011. The GDF SUEZ Board of Directors views the cooperation with CIC and the transaction as having a strong strategic interest for GDF SUEZ.”

Read more: GDF SUEZ Press Release

The China Investment Corporation has a history of investing in energy companies and energy-related investment projects, especially in the Americas. A few notable deals include: AES Corp, Penn West Energy Trust, and the Chesapeake Energy Corporation. GDF Suez SA is a French firm that is involved with liquefied natural gas, energy efficiency services, independent power production and environmental services. GDF Suez SA is near closing a deal with the China Investment Corporation. [Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

Nicky Oppenheimer

Temasek Holdings and E. Oppenheimer & Son International Ltd, a family investment vehicle of the Oppenheimer family, are forming a joint venture called Tana Africa Capital. Tana Africa Capital (50/50 joint venture) will invest in private and public companies in consumer goods sector in South Africa as well as natural resources. This is not Temasek’s first investment incursion into South Africa. It made a substantial investment in Platmin, a South African platinum developer.

E. Oppenheimer & Son International Ltd owns a sizable equity stake in De Beers as well as other commercial interests.

South Africa has struggled gaining significant direct investments due to threats of nationalizations of natural resources.

Maple Group Acquisition Corporation is comprised of thirteen Canadian financial institutions and pension funds. The collection of investors has extended their offer to acquire a minimum of 70% and a maximum of 80% of TMX Group shares in concert of an integrated deal. The total valued transaction at 100% shares is $3.8 billion. The offer is being extended till September 30, 2011. Maple Group Acquisition Corporation is confident it will pass Canadian regulatory hurdles.

If the deal goes through, Maple Group Acquisition Corporation wants to maintain the exchange’s presence in Canada and create operational efficiencies through technology.

Maple Group is the last man standing in terms of buying out TMX, as the London Stock Exchange did not garner enough TMX shareholder approval.  TMX Group has performed well recently. In the first calendar quarter of 2011, it had a profit margin of 36.2% based in USD. NYSE Euronext’s profit margin in the same time period was 14.07%.

• About Maple Group Acquisition Corporation
• Alberta Investment Management Corporation
• Caisse de dépôt et placement du Québec
• Canada Pension Plan Investment Board
• CIBC World Markets Inc.
• Desjardins Financial Group
• Dundee Capital Markets Inc.
• Fonds de solidarité des travailleurs du Québec (F.T.Q.)
• GMP Capital Inc.
• National Bank Financial Inc.
• Ontario Teachers’ Pension Plan
• Scotia Capital Inc.
• TD Securities Inc.
• The Manufacturers Life Insurance Company

According to the press release, “Hamilton Sundstrand Corporation and Mubadala Aerospace have finalized a wide-ranging strategic agreement under which Mubadala Aerospace will be a key part of the support network for servicing Hamilton Sundstrand products and systems on the Boeing 787. The deal, a first for Hamilton Sundstrand, includes a licensing agreement for Mubadala Aerospace to provide maintenance, repair and overhaul (MRO), through Mubadala-owned companies Abu Dhabi Aircraft Technologies (ADAT), SR Technics and Sanad Aero Solutions (Sanad), based on Hamilton Sundstrand’s technical expertise. The agreement gives 787 operators an additional choice for their maintenance needs for Hamilton Sundstrand products and systems, which make up a majority of the systems on Boeing’s new 787 Dreamliner.

Mubadala Aerospace is a business unit of Mubadala Development Company, the strategic investment arm of the Abu Dhabi government. Hamilton Sundstrand is a subsidiary of United Technologies Corp. (NYSE: UTX).

Under the license agreement, ADAT and SR Technics will provide integrated component solutions (ICS) to Boeing 787 airline customers, while Sanad will provide financing of rotable components, all with the technical support of Hamilton Sundstrand. Mubadala Aerospace is developing a global network covering the entire MRO value chain, including engine, component and airframe capabilities, in addition to spare engine and rotable leasing through Sanad.

“Hamilton Sundstrand is pleased to establish this key relationship with Mubadala Aerospace to equip Mubadala MRO companies with the required resources to service Hamilton Sundstrand systems and particularly components for the Boeing 787,” said Matthew Bromberg, vice president and general manager, Hamilton Sundstrand Customer Service. “This arrangement will allow Hamilton Sundstrand to extend its reach of OEM world-class service by building on Mubadala Aerospace’s capabilities in both the Europe and the Middle East. The Boeing 787 has a diverse customer base and demands diverse maintenance solutions.”

Homaid Al Shemmari, executive director of Mubadala Aerospace, said, “We are delighted to sign this strategic agreement with Hamilton Sundstrand, which brings essential component capability to ADAT and SR Technics for the Boeing 787 and financing opportunities for Sanad. Hamilton Sundstrand is one of the largest players in the aerospace components industry, and shares our global ambitions. Importantly, this expands our relationship with UTC and complements our existing partnership with Sikorsky in AMMROC. We are excited about the overall opportunities this relationship brings to both parties.”"

Read more: Hamilton Sunstrand Press Release

The table below displays the top ten SWF Direct Deal Transactions of 2010, excluding the SWFTD’s open market transactions. The direct transaction amounts are smaller compared to the bailout years of 2007 and 2008. The IPO of the Agricultural Bank of China has made a notable impact on the list.

Source: Sovereign Wealth Fund Transaction Database – Deals Only (No open markets)

Buy a License of the Sovereign Wealth Fund Transaction Database today.

The IDFC press release states, “IDFC and Khazanah have agreed to enter into a joint venture (JV) to set up a dedicated infrastructure development company with a focus on road sector in India. Khazanah would hold 80.1 % of the equity share capital in the proposed JV and the balance would be held by IDFC. Khazanah and IDFC also propose to invest in convertible instruments issued by the JV.

The first investment of this JV will be in Jetpur Somnath Tollways Limited (JSTL), subject to receipt of necessary regulatory approvals and permissions, including those from the National Highway Authority of India. JSTL undertakes development of a project involving four-laning the Jetpur-Somnath section of the National Highway-8D in the State of Gujarat. 74% of the share capital of JSTL is currently held by IDFC Projects Limited (IDFCPL). The JV will initially acquire 48% of the share capital of JSTL from IDFCPL and will ultimately acquire the entire shareholding of IDFCPL in JSTL and hold 74% of the share capital of JSTL.”

Source: Infrastructure Development Finance Co Press Release

Owned by the Province of Alberta, the Alberta Investment Management Corporation (AIMCo) manages investments for the Alberta Heritage Fund, public pensions, and other governmental funds.  They have been an active investor in several prolific direct investing strategies.  In the next twelve months, the crown corporation could spend as much as C$700 million (US$ 720 million) in private equity type purchases.  These would mostly likely be mid-market type transactions.  AIMCo has spent a tremendous amount of internal resources and time beefing up their private equity / direct investment team.[Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

Georgia is a country with ripe agricultural land and located strategically by the Black Sea. The country’s soil and climate has made farming a very productive sector for the overall domestic economy. Crops such as corn, wheat, hazelnuts, citrus fruits, and grapes are dominant. Hassad Food, the sovereign wealth enterprise of the Qatar Investment Authority is on the lookout for agricultural investments. They recently made a visit to meet with the Finance Minister of Georgia. In addition, they also discussed about Qatari Diar’s possible investment in developing hotel properties in the country.

It might be a strategically convincing idea to partner with Qatar, as Georgia imports nearly all its required materials for gas and oil products.

May 2011 Update: We have Financial Advisor League Tables available for the following Sovereign Wealth Funds:

• Financial Advisor League Tables – China Investment Corporation
• Financial Advisor League Tables – Korea Investment Corporation
• Financial Advisor League Tables – GIC
• Financial Advisor League Tables – IPIC
• Financial Advisor League Tables –Mubadala
• Financial Advisor League Tables – Qatar Investment Authority
• Financial Advisor League Tables –Temasek Holdings

The press release states, “Aabar Investments PJS (“Aabar”) today confirmed an investment of $850 million in Glencore International plc (“Glencore”) as a cornerstone investor with an intention to invest an additional $150 million in the Global Offer. Glencore is one of the world’s leading integrated producers and marketers of commodities. This investment makes Aabar the largest cornerstone investor in the IPO.

His Excellency Khadem Al Qubaisi, Chairman of Aabar: “We are pleased to count ourselves as the largest new shareholder of Glencore post its IPO. Glencore is known for its achievements and value creation in the resources space and we are excited about the potential opportunities between Abu Dhabi and Glencore given Abu Dhabi’s leadership in petrochemicals and hydrocarbons domestically and around the world. The investment is consistent with our policy of investments and strategic partnerships with global market leading businesses and, we are looking forward to a successful partnership with the company”.

The $850 million investment represents the foundation of Aabar’s commitment as the largest cornerstone shareholder in Glencore and the sovereign wealth fund intends to acquire additional shares in the Global Offer to bring its initial investment up to $1 billion in the short term.

“Given Aabar’s focus on value enhancing investments and the great opportunity that global commodities offer we intend to explore in due course areas of co-operation between the two firms. This is an important milestone in Aabar’s development strategy and we are proud to lead this effort.” adds Mohamed AlHusseiny, CEO of Aabar.”

Read more: Aabar Investments Press Release

Asian sovereign funds have been active in investing in Latin American natural resources. The Korea Investment Corporation, Canada’s Ontario Teachers’ Pension Plan (OTPP), and another investor are planning to invest in Manabi Holding SA. Manabi Holding SA is a Brazilian special purpose company that manages steel assets and iron ore exploration.[Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

Sovereign wealth funds are no strangers to European football clubs. Football clubs present an attractive investment opportunity for strategic sovereign funds as it gives them exposure to the advertising and entertainment sectors. The Libyan Investment Authority used to own a part of the Juventus club. In June 2009, Colony Capital bought out Morgan Stanley’s interest in the French football team, Paris Saint-Germain (PSG). Colony Capital is now looking to sell its holding in Paris Saint-Germain. They are looking to sell their 95.8% stake in the club.

One potential suitor is the Qatar Investment Authority. It is rumored that the proposed deal figure is around €50 million. Not to also mention, the Emirates Group is an official partner of PSG and has renewed their team sponsorship until the 2013-2014 season.

Qatar will be hosting the 2022 FIFA World Cup. Qatar is the first Arab nation to host a World Cup.

China’s National Council for Social Security Fund is planning to invest $1.5 billion in the China Development Bank. The money will be used to help strengthen the capital base of the bank. The fund can hold up to a 2.19% stake in the bank. The National Council for Social Security Fund has also invested in other major Chinese state banks such as the Industrial and Commercial Bank of China, Bank of China, and the Bank of Communications.

On March 23, 2011, Qatar Holding, the sovereign wealth enterprise of the Qatar Investment Authority, exceeded the investment threshold of 10%. Qatar Holding has invested a large sum of money into HOCHTIEF AG, one of Germany’s largest builder companies. The sovereign wealth enterprise intends to have representation on the supervisory board of the firm.[Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

Frac Tech Holdings LLC is a Texas based provider of oil and natural gas well stimulation services. They have expertise in high-pressure hydraulic fracturing. The company has operations across the United States. Temasek Holdings is on a campaign to booster its energy industry portfolio. Maju Investments formed a consortium to purchase a 70% stake in Frac Tech Holdings LLC with RRJ Capital.  [Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

According to the press release, “Semiconductor Manufacturing International Corporation (“SMIC”; NYSE: SMI; SEHK: 0981.HK), China’s largest and most advanced semiconductor foundry, announced today a definitive investment agreement between SMIC and China Investment Corporation (CIC). Under the terms of the agreement, CIC will invest US$250 million in SMIC, acquiring 360,589,053 convertible preferred shares at HK$5.39 per convertible preferred share. After issuance and conversion of the new shares, CIC will own approximately 11.6% of SMIC’s outstanding share capital. The agreement also provides CIC with warrants for investing an additional US$50 million in SMIC on the same terms, and entitles CIC to nominate one member of SMIC’s board of directors.

“We are very pleased with our new partnership with CIC,” said Dr. Jiang Shangzhou, Chairman of SMIC. “Their investment in SMIC provides a source of capital that allows us to take full advantage of our project pipeline. Partnering with CIC is conducive to realizing our development objectives and enhancing our competitive advantage in the international arena. We welcome this investment from CIC.”"

Read more: SMIC Press Release

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Sovereign wealth funds are at it again, investing directly into another private equity management firm.  [Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

According to the press release, “Qatar Holding LLC and IBERDROLA, S.A. are pleased to announce today that they have signed a Strategic Memorandum of Understanding setting forth the framework for collaboration in developing their respective business activities through the establishment of a long-term, mutually beneficial, strategic partnership.

The two parties will cooperate for the purpose of developing new business opportunities in different areas of the global electricity value chain with a focus on high-growth and emerging markets. IBERDROLA also intends to establish its regional Headquarters as well as research and development operations in the State of Qatar.

Additionally, Qatar Holding through its wholly-owned subsidiary has fully subscribed to the 6.17% capital increase approved by the Board of Directors of IBERDROLA for a total investment amount of €1,906 million. The issue price is €5.633 per IBERDROLA share. Further, Qatar Holding through its wholly-owned subsidiary has agreed to acquire treasury shares representing 0.37% of the share capital of IBERDROLA pre-increase, at the same price per share for a total purchase amount of €115 million. Consequently, Qatar Holding through its subsidiary will hold 6.16% of the share capital of IBERDROLA outstanding after the capital increase. The cash inflow from the capital increase will allow IBERDROLA to strengthen its financial position and pursue corporate transactions such as its proposed merger with IBERDROLA RENOVABLES, S.A., the acquisition of Elektro Electricidade e Servicios, S.A. in Brazil, and other growth opportunities.”

Read more: Iberdrola Press Release

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The press release states, “the Abu Dhabi sovereign wealth fund, International Petroleum Investment Company (IPIC), which currently owns 47.06% of CEPSA’s share capital, has announced today, through a significant event filed with the Spanish Securities Market Commission (CNMV), that it will launch a public takeover bid on the entire share capital of CEPSA. The offer price will be €28 per share, which assumes a €0.50 dividend that CEPSA will pay out prior to the settlement of the takeover bid (otherwise, the price would be adjusted so that the amount received by shareholders who accept the offer, adding up the price plus the dividend, would be €28.50 per share).

• TOTAL has undertaken to tender all of the shares it owns in CEPSA in this offer, representing 48.83% of the share capital
• The offer price has been set at €28 per share, plus a dividend of €0.50 which will be paid out to shareholders before the settlement of the bid
• The transaction is conditional on obtaining all the required approvals and clearances from the Spanish Securities Market Commission (CNMV) and the competition authorities

As a result, the total deal would be valued at approximately €3,970 million if the offer were to be accepted by all shareholders. TOTAL has irrevocably undertaken to tender all of the shares it owns in this offer, equivalent to 48.83% of CEPSA’s share capital. These shares are held by TOTAL through its subsidiary Odival. The takeover bid, apart from requiring authorization from the Spanish Securities Market Commission, CNMV, must also obtain the necessary approvals and clearances from the competition authorities.”

Read more: CEPSA Press Release

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In 2008, several Middle-Eastern sovereign funds and corporations started investing heavily in retail companies in developed economies. For many it didn’t pay off. In 2006, Dubai World’s strategic arm, Istithmar World investment purchased NY-based Loehmann Holdings’s for US$ 300 million. In November of 2011 Loehmann’s filed for bankruptcy court protection. [Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

New Ownership Structure

Singapore’s GIC is active in energy infrastructure whether it’s in a developed or developing economy. The GIC partnered with ArcLight Capital Partners, LLC and GE Energy Financial Services to become investment partners in five Georgia natural gas-fired power plants. [Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

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According to the press release, “Abu Dhabi and Sana’a– Mubadala Oil & Gas and Yemen Company for Investments in Oil and Minerals (YICOM) announced today that they have signed a Memorandum of Understanding (MOU) on cooperation in the exploration and production sector of the oil and gas industry in the Republic of Yemen.

The MOU provides for an exchange of technical information between the two companies and co-operation to assess opportunities to work together on new investments, field redevelopment and expansion projects and other oil and gas operations in Yemen.

The MOU was signed by Ali Saleh Al- Kadi, Executive General Manager, Yemen Company for Investments in Oil and Minerals and Suhail Al Mazrouei, Deputy Chief Executive Officer, Mubadala Oil & Gas. It was witnessed by His Excellency Amir al-Aydarus, Minister of Oil and Minerals of the Republic of Yemen and His Excellency Abdullah Matar Al-Mazroui, United Arab Emirates Ambassador to Yemen.”

Read more: Mubadala Press Release

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.]

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The press release states, “HOCHTIEF Aktiengesellschaft welcomes Qatar Holding LLC (Doha) as new major shareholder: HOCHTIEF increases the capital stock of the company by around ten percent under exclusion of subscription rights of existing shareholders. After acquiring all new shares, Qatar Holding will – as soon as the capital increase is registered with the commercial register – hold almost 9.1 percent of the new capital stock. The Ad-hoc Committee of the HOCHTIEF Supervisory Board has approved the capital increase. Qatar Holding LLC is the strategic and direct investment arm of Qatar Investment Authority.

The capital increase will be carried out by partly making use of the authorized capital created at the HOCHTIEF General Shareholders’ Meeting on May 11, 2010, by issuing 6,999,999 no-par-value shares against cash contributions. According to the resolution of the General Shareholders’ Meeting, subscription rights of existing shareholders are excluded. The issue price is EUR 57.114 per share, resulting in an equity contribution of almost EUR 400 million to HOCHTIEF. “The cash inflow from the capital increase strengthens the financial position of HOCHTIEF. In addition, it provides latitude for the announced further growth after the planned bond issue had to be called off in mid-September,” says CEO Dr. Herbert Lütkestratkötter.”

Read more: Hochtief Press Release

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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A number of sovereign wealth funds are lowering allocation from bonds to more risky, illiquid assets, such as direct investment in companies.  Their position sizes have increased and they are now providing more capital for public and private companies across various industries.  SWFs have made generous profits from investing in direct investment / PIPE investments in numerous industries such as natural resources, materials, real estate, financial institutions, and energy.  Furthermore, there is growing collaboration among SWFs, whether investing in an IPO, PIPE, or even venture capital deal.  Private back room deals with favorable investment terms are enhancing returns, rather than purchasing shares in the public markets.  In general, institutional investors are relying less on public markets for returns.[Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

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Temasek Holdings has invested $400 million in Odebrecht Oleo e Gas for a 14.3% stake in the unit.  Odebrecht Oleo e Gas is part of Odebrecht, a large conglomerate.  Odebrech Oil and Gas view the investment essential to help them grow capital expenditures to tap into Brazil’s blossoming offshore oil trade.

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According to the press release, “OP Financial Investments Limited (“OP Financial” or “the Group”), is pleased to announce that on 25 August 2010 a limited partnership was formed with China Investment Corporation (“CIC”), both through wholly owned subsidiaries, with the principal purpose to invest directly or indirectly in the production, processing, transportation and trade of agricultural crops on a trial basis in Kazakhstan. Total paid up capital of US$ 16.5 million was received on 21September, 2010 to fund preliminary trials. CIC and OP Financial have injected US$15 million and US$1.5 million respectively to the project, led by Zhang Weidong, Deputy CEO and head of OP Financial’s private equity team.

As the General Partner, OP Financial shall manage and introduce technology partners to the project. This is OP Financial’s second arrangement with CIC to date.

Mr. Zhang Gaobo, CEO of OP Financial, said, “We are pleased to continue our partnership with CIC with this new project in Kazakhstan. The agriculture industry is becoming increasingly important, especially in light of growing global demand for food. Kazakhstan is a leader in energy such as oil and gas, but with technology and implementation of global best practices, we believe it can be a leading player in the agri–sector as well.”

Source: Press Release

By Alexia Wai-Chun Tye

Guest Contributor

Whilst the FSI’s newly appointed CEO Jean-Yves Gilet has yet to take up his position after the summer lull, the President of the Board, Augustin de Romanet, has been speaking publicly on a variety of issues facing the FSI and its 51% controlling shareholder, the state institution Caisse des Dépôts (“CDC”).

A frequently asked question concerns the financial resources of the FSI and its longer term future.  With the double threat of new prudential regulations Basel III and Solvency II that will soon come into force, de Romanet sees a shrinking of the traditional sources of funding for fast-growing, innovative companies, acting alongside the FSI and CDC.  In the medium term FSI will need further capital injections in order to ensure that promising French companies receive the support they need.  In the shorter term, de Romanet sees the solution coming from long term international investors, including in particular sovereign wealth funds, co-investing alongside the FSI and its parent CDC.  He also mentioned soliciting investors from Singapore, Malaysia and Kuwait. [Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

This article will appear in the Sovereign Wealth Quarterly Q3Y2010.

The views, opinions, positions or strategies expressed by guest contributors and those providing comments are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of the Sovereign Wealth Fund Institute or any employee thereof.

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China Daily reports, “Sovereign wealth fund China Investment Corporation (CIC) has finalized a $956 million investment deal with British private equity fund group Apax Partners, a source close to the fund said yesterday. The source confirmed media reports that CIC was planning to invest $956 million in Apax Partner’s 11.2 billion-euro fund. Apax has already got approval from the British Financial Services Authority for the deal, which may also see CIC acquiring a 2.3 percent stake in the UK company.

The sovereign wealth fund is also in talks with Italian power operator Enel SpA on buying stakes in the energy firm and its subsidiary company Enel Green Power, the source said.

CIC’s moves may tempt other foreign private equity groups to solicit financial support from the Chinese sovereign wealth fund. It also shows that China is still eager to invest its burgeoning foreign reserves in foreign markets after the heavily criticized loss-making investment in Blackstone two years ago.

Li Xiaogang, director of the Foreign Investment Research Center at Shanghai Academy of Social Sciences, said although the global investment climate has shown strong signs of recovery, Chinese fund companies, especially the sovereign wealth fund, should remain cautious when engaging in overseas investment.

‘The risk is that Chinese fund companies are usually constrained from influencing the investment strategy of overseas fund companies,’ Li said. ‘They are still novices in the global financial market, and hence should be well prepared before making any investments in foreign PE funds or companies.’”

read more: China Daily

According to the China Investment Corporation – Press Release, “China Investment Corporation (“CIC”) today made an investment through a wholly-owned subsidiary in the amount of USD 1.58 billion in AES Corporation (“AES”). At close, CIC will acquire 125.5 million shares of AES stock for USD 12.6 per share, representing approximately 15% equity interest in the company. According to the investment agreement, CIC will nominate one director to the AES board.

CIC has also signed a letter of intent with AES to invest an additional USD 571 million for an approximate 35% interest in the wind generation business of AES.”

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The press release states, “Temasek Financial (I) Limited has launched the issue of US$1.75 billion 4.5% of guaranteed notes due 2015. This issuance is part of a US$5.0 billion Guaranteed Global Medium Term Note Program (the “Program”). Under the Program, notes issued by Temasek Financial (I) Limited, are fully and unconditionally guaranteed by Temasek Holdings (Private) Limited (“Temasek”). Temasek is rated AAA by Standard & Poor‘s and Aaa by Moody’s Investor Services.

The notes were marketed globally. The Joint Arrangers for the Program and the Joint Bookrunners for the issue are Deutsche Bank, Goldman Sachs and Morgan Stanley. In addition, DBS Bank, Deutsche Bank, Goldman Sachs and Morgan Stanley acted as Joint Lead Managers for the issue, which was also co-managed by Bank of America Securities, Calyon, Citigroup, HSBC, Société Générale Asia and Standard Chartered Bank.”

Read more: Press Release

According to the press release, “Bank of China Limited (“Bank of China”) and Temasek Holdings (Private) Limited (“Temasek”) jointly announced today that, following negotiations and discussions by the two entities, Temasek will, through its wholly-owned subsidiary Asia Financial Holdings (‘AFH’), acquire a 10% interest in Bank of China for US$3.1 billion. Temasek has also undertaken to subscribe for an additional US$500 million worth of shares during Bank of China’s initial public offering. This transaction is pending government and other relevant regulatory approvals.

With this agreement, Bank of China has introduced another strategic investor following the signing of the strategic investment agreement with Royal Bank of Scotland on August 18, 2005.

Subject to mutual agreement, Temasek will assist Bank of China in improving corporate governance, including the right to nominate suitable candidates for election to Bank of China’s board of directors. Other areas of collaboration and support are under discussions.

In addition to a strong focus on corporate governance, Temasek will facilitate linkages to other players in the Asian financial sector to support the development of Bank of China’s talent pool and technology base. As major financial institutions in Asia, both entities also agreed to strengthen their cooperation and contribute to the financial sector modernization in Asia.

Bank of China said,”Temasek is a major investor in Asia, with a strong reputation and matured operating mechanism in the area of corporate governance. Bank of China is a banking group with nearly a hundred years of history, and has established a prudent business style and a broad customer network. The cooperation of these two strong financial institutions with complementary strengths will result in enhanced competitiveness. The strategic investment by Temasek will support the deepening of the overall reform for Bank of China. The transaction will help Bank of China further strengthen its capital base, improve its shareholder structure and enhance its corporate governance.”

Temasek said, “We are delighted that an agreement has been reached with Bank of China. This is our largest direct investment in China, and is also a long term investment for us. It underlines our confidence in the long-term growth of China’s economy. More importantly, this investment represents our belief that Bank of China has transformed itself into a strong financial institution with extensive networks in China and overseas. We share the bank’s belief in its tremendous potential and are privileged to be an investor.”"

Read more: Press Release

According to the press release, “CNOOC Limited (the “Company”) announces that an investor group led by AIG Asian Infrastructure Fund II, L.P. (“AIGAIF”), GIC Special Investments Pte. Ltd. (the private equity arm of the Government of Singapore Investment Corporation (“GIC”)) and American International Assurance (“AIA”) have invested approximately US$210 million in the equity shares of the Company. The share placement closed on April 7, 2000. The Company will use the proceeds from the placement to finance its capital expenditure and working capital requirement as well as to repay its existing bank debt.

AIGAIF, with US$1.7 billion in commitment, makes equity and equity-linked investments in infrastructure and infrastructure-related sectors in Asia. American International Group, Inc. is the sponsor and GIC is the principal investor of AIGAIF. The principal adviser to AIGAIF is Emerging Markets Partnership.

GIC is a fund management company entrusted with the mandate to manage Singapore′s foreign reserves.

The Company′s Chairman and CEO Liucheng Wei emphasized the significance of this investment: “With this investment, we gain access to international financial market to fulfill our growth plans for 2000 and beyond. We have set a clear goal for the Company: to establish ourselves as one of the world′s premier exploration and production companies. Offshore natural gas is an increasingly important source of clean and reliable energy for China and will be a key growth area for the Company. We are pleased to have support from sophisticated international investors such as AIGAIF, GIC and AIA.”

The Company was formed on October 1, 1999 through the reorganization of parent company China National Offshore Oil Corporation (“CNOOC”) and is one of the world′s largest exploration and production companies. The Company dominates the offshore oil and natural gas exploration and production in China. During the 12 months ended 1999, the Company had US$1.8 billion in revenues, US$495 million in net income and averaged daily production in excess of 210,000 barrels of oil equivalent. As of December 31, 1999, the Company had reserves of approximately 1.8 billion barrels of oil equivalent.

Through CNOOC, the Company has the exclusive right to enter into production sharing contracts (“PSCs”) with international oil and gas companies to conduct joint exploration and production activities offshore China and to sell such petroleum in China. Under the PSCs, the Company has the right to acquire up to a 51% participating interest in any oil or gas field discovered in the contract area after the foreign party has independently undertaken exploration and discovered commercial quantities of oil or gas.

CNOOC Ltd. is the largest producer of oil and gas offshore China and is one of the largest independent oil and gas exploration and production companies in the world with net proved reserves of approximately 1.8 billion barrels-of-oil equivalent as of December 31, 1999.”

Read more: Press Release