Sovereign Wealth Fund Institute

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According to Reuters, “Singapore’s biggest sovereign wealth fund GIC has chosen UBS, China International Capital Corp (CICC) and Singapore’s DBS as joint bookrunners for its upcoming logistics unit IPO, two sources familiar with the deal said.

The initial public offering is likely to raise $2-$3 billion, much higher than earlier estimated, said the sources who declined to be named because the deal has not been made public yet.

These banks will join JPMorgan and Citigroup, which were first chosen as joint global coordinators, they said.

UBS and DBS declined to comment and CICC was not immediately available for comment. GIC also declined to comment.”

Source: Reuters

Tony Tan

According to Bloomberg, “The global rebound is “fragile” and shocks could push the world toward another recession, according to Government of Singapore Investment Corp., manager of more than $100 billion of the nation’s foreign reserves.

Risks to the global recovery have increased due to Europe’s debt turmoil, continued deleveraging in the U.S. and protectionist pressures, Tony Tan, deputy chairman of GIC, said in a speech in Singapore today. The fund is ranked the world’s sixth-largest state investment company by Sovereign Wealth Fund Institute in California.

“The economic recovery, while real, is fragile and there is a risk that negative shocks could push the global economy towards a recession sooner than expected,” Tan said. “The strong rebound in global industrial production is peaking while monetary and fiscal policies, particularly in the larger emerging economies, are being normalized.””

Read more: Bloomberg

BP is not a new investment for SWFs, especially Middle Eastern sovereign wealth funds.  Already the Kuwait Investment Authority is a large holder of the security, including many others.  In the past, numerous SWFs have taken small equity positions in BP.  Now with the possibility of a takeover from oil rivals and the need to increase their capital base, SWFs may come to the rescue at the right price and structure.  BP also has the option of selling assets in its oil producing portfolio as well.

According to the AP, “BP may be looking to sovereign wealth funds in the oil-rich Middle East to fend off takeover bids amid mounting costs from the Gulf of Mexico oil leak disaster, according to reports published Sunday.

The National, an Emirati newspaper, cited unnamed “informed sources” in the region saying that Mideast financial institutions have submitted proposals to BP advisers and are waiting for a response. Among the options being considered are the acquisition of key assets or a direct cash injection to help strengthen the oil giant’s balance sheet, according to the English-language paper.

The paper quoted a person it called an informed source as saying that “BP knows there is potential support from the Middle East.”

The National is owned by the government of Abu Dhabi, one of seven emirates that make up the United Arab Emirates federation. The sheikdom hosts the country’s capital and controls nearly all the OPEC member state’s oil reserves.

BP spokeswoman Sheila Williams in London declined to say whether the company had been approached by investors from the region.

“We don’t comment on financial issues,” she said.”

Source: AP

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BNN Summary: “Singapore’s sovereign wealth funds, Temasek and GIC, are focusing on natural resources, clean tech, biotechnology and food. The funds have also taken a keener interest in Canadian-listed companies like Platmin and Inmet. BNN speaks to Michael Maduell, president, Sovereign Wealth Fund Institute.”
see video BNN News

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According to Reuters, “Singapore’s biggest sovereign wealth fund, GIC, said it converted its UBS notes into ordinary shares, suffering a paper loss of about $5 billion.

The Government of Singapore Investment Corp had invested 11 billion Swiss francs ($10.22 billion) in mandatory convertible notes in UBS to support the Swiss bank during the financial crisis. GIC did not provide more details, but a filing it made to the U.S. Securities and Exchange Commission early last month showed the original conversion price would be 47.7 Swiss francs, two-thirds more than UBS’s last share price of 15.86 francs. GIC had earned about 2 billion francs from a 9 percent coupon over the last two years, which partially compensated for the sharp erosion in UBS’ share price.

“GIC confirms the conversion,” a spokeswoman for the Singapore wealth fund said in response to Reuters’ queries.”

read more: Reuters

Business Week reports, “Glencore International AG, the biggest commodity trader, sold as much as $2.2 billion of convertible bonds to investors including BlackRock Inc. in what may be the first step toward an initial public offering.

The bonds, which are due December 2014, are convertible into Glencore shares upon an IPO or “other pre-determined qualifying events,” the Baar, Switzerland-based trader said today in an e-mailed statement. The terms of the bonds give Glencore a pre-conversion equity value of $35 billion, it said.

Other buyers of the bonds include Government of Singapore Investment Corp., Greenwich, Connecticut-based private equity investor First Reserve Corp., and Zijin Mining Group Co., China’s third-largest copper producer, Glencore said. Glencore, led by Chief Executive Officer Ivan Glasenberg, saw net income slide 56 percent to $1.8 billion in the first nine months of 2009 after commodities fell. It sold its Prodeco coal assets in Colombia in March for $2 billion to Xstrata Plc, in which Glencore has a 34 percent stake. Glencore will likely use proceeds from the bonds to take up its option to buy back Prodeco, Barclays Capital credit analyst Neil Beddall said.

“That’s why they pressed the button on this investment now,” Beddall said by phone from London. “Longer term, the IPO will be used to pay out the senior partners and to alleviate the liquidity concerns some had over the business.

The offering was increased from between $1.5 billion and $2 billion because of “strong” demand, Glencore said.

“This transaction, in which Glencore is opening up its equity capital to outside investors, marks an important milestone as we embark on the next stage of our corporate development,” Glencore said in the statement.”

read more: Business Week

According to the Press Release, “The Board of Directors of Springer Science+Business Media (Springer Group), composed of Springer executives and representatives of Cinven and Candover, have agreed to accept an offer from and have signed a sales agreement with a partnership of EQT, a private equity investor based in Sweden, and GIC, a Singapore-based co-investor, for all shares of the Springer Group. The Springer Group is the world’s second largest scientific, technical and medical (STM) publisher and a leader in the digitalization of scientific information.

Furthermore, EQT and GIC have agreed to inject new equity into the Springer Group, to strengthen its balance sheet and decrease the overall cost of funding. A refinancing agreement with a syndicate of banks will give the Springer Group medium-term stability by removing imminent potential refinancing issues.

The acquisition is subject to examination and approval by European, US and national competition authorities. This process is expected to be finished by mid to late January or early February 2010.

Derk Haank, Springer’s CEO, said, “The Springer Executive Management Team has had constructive and collegial discussions with EQT. I am confident that this marks the beginning of a new exciting and successful chapter for us and for our new partners at EQT and GIC. The sale will allow us to move our ambitious and ongoing ‘e’ strategy forward, and to invest more heavily for our stakeholder’s benefit – this is the best solution for the company, our employees and shareholders.”

Financial advisors to the Springer Group were Goldman Sachs with Freshfields Bruckhaus Deringer acting as legal counsel.

Springer Science+Business Media is a leading global scientific publisher, delivering quality content through innovative information products and services. The company is also a trusted provider of local-language professional publications in Europe, especially in Germany and the Netherlands. In the science, technology and medicine (STM) sector, the group publishes around 2,000 journals and more than 6,500 new books a year, and has the largest STM eBook Collection worldwide. Springer has operations in about 20 countries in Europe, the USA, and Asia, and has more than 5,000 employees. In 2008, it generated annual sales of around EUR 892 million.”

read more: Press Release

According to Business 24-7, “Protectionist barriers aimed at capital-rich sovereign wealth funds (SWFs) could backfire on the fragile global economy, top executives of major state investment firms warned yesterday. The sovereign funds have the capital needed by affected economies to recover from the global crisis but governments may come under domestic pressure to impose protectionist measures, they said. Tony Tan, Deputy Chairman of the Government of Singapore Investment Corp (GIC), said the biggest danger facing the world economy in coming years is protectionist sentiment, which may be stoked by high unemployment rates. Tan, speaking at a business forum on the sidelines of an Asia-Pacific summit, said protectionism could spread from the trade arena to financial markets.

“This could manifest itself in the form of protectionist measures not only in world trade but also in financial markets and impede the free flow of funds,” he said.

“If nothing else, this could derail the global economic recovery which all of us are hoping for,” said the GIC deputy chairman.

Jin Liqun, from the China Investment Corporation (CIC), also cautioned against barring investments from government-owned funds. “The sovereign wealth funds will be playing a big role in rebalancing the process but we need co-operation from the recipient countries,” said Jin, CIC’s chairman of the board of supervisors.

“There’s nothing we can do if we are barred from doing our jobs in your countries or when hurdles are very high for us to overcome,” he said.

Jin said sovereign funds can play a major role in restructuring economies.

“Countries need a cushion in undertaking major economic restructuring and provisional funding is of course crucial,” he said, adding that the global recovery was not irreversible.

When the global crisis unfolded, SWFs emerged as a source of crucial capital, especially to Western financial firms and banks in dire need of fresh funding. Singapore’s GIC, which manages the city-state’s reserves of more than $100 billion (Dh367bn), was one of the rescuers of US-based Citigroup and Swiss banking giant UBS. Kuwait Investment Authority’s (KIA) Managing Director Bader Al Saad told the forum that SWFs have collectively pumped $90bn into financial institutions in the last few years.

“I think now we are in a new era of engagement,” said Al Saad.

“There is a unique opportunity for the sovereign wealth funds to represent themselves as investors in the world… They are a long-term investor,” he said.

Al Saad also said perceptions that SWFs were a source of destabilisation in financial markets and that investments were driven by political agendas could not be further from the truth.

“Most of their transactions are cash transactions so there is a real economy and it shows that they are responsible investors,” he said.

“They are a source of stability and last but not least, they are strategic investors… On top of that, they never make hostile takeovers.”"

read more: Business 24-7

According to Reuters, “Sovereign wealth fund the Government of Singapore Investment Corp [GIC.UL] regards downside protection as important when considering investments in infrastructure projects, a senior executive said on Wednesday.

Teh Kok Peng, president of GIC Special Investments, said infrastructure provides bond-like, rather than equity-like, returns so the protection offered to investors and the regulatory framework are things the Singapore fund looks at.

‘The returns are not that great because they are regulated,’ he said at a World Bank conference in Singapore.“

read more: Reuters

According to the press release, “An investor consortium comprising affiliates of Kohlberg Kravis Roberts & Co. L.P. (KKR), GIC Special Investments Pte. Ltd. (GIC SI) and China International Capital Corporation Limited (CICC) announced an investment of $160 million for a significant minority stake in International Far Eastern Leasing Company Ltd. (Far Eastern), the leading provider of financial leasing in China and a subsidiary of Sinochem Group (Sinochem). The investment will support Far Eastern’s future growth as it moves to capitalize on the attractive potential in the underdeveloped financial leasing space in China. Sinochem is retaining a controlling stake in Far Eastern.

‘We are very excited to have world-class investors, comprising KKR as the lead investor, together with GIC SI and CICC, as long-term partners in Far Eastern’s development,’ said Mr. Kong Fanxing, Chief Executive Officer of Far Eastern. “In addition to capital, their experience investing in and growing financial services businesses globally brings tremendous value to Far Eastern and will enable us to further develop our ability to provide integrated and innovative business services around our core business of financial leasing. This investment will also help support the Shanghai government’s long term goal to develop the city into a global financial and shipping center.’

Headquartered in Shanghai, Far Eastern is focused on providing innovative and industry-tailored financing solutions for its clients. The company targets sectors with stable cash flow and sustainable growth potential, including those in the medical, printing, education, infrastructure construction, shipping, machine tool sectors, etc.

‘We are delighted to have the opportunity to invest in Far Eastern, the market leader in the financial leasing industry in China. We have been extremely impressed with the company’s strong track record, outstanding management team, deep customer relationships and a very supportive shareholder, Sinochem.” David Liu, Member of KKR and Head of KKR Greater China, said. “We look forward to fully utilizing our financial services industry expertise and global network to support the company as it continues to grow and develop into a world-class financial institution.’

‘We are pleased to become a partner of Far Eastern Leasing and Sinochem. As a global investor, GIC SI has a long-term investment interest in China,” Liu Dong, Head of GIC SI Greater China said. “We have extensive investment experience in China’s financial services industry and state owned enterprises. We would share our experience with Far Eastern and Sinochem and help accelerate the development of their businesses.’

‘We are excited to have the opportunity to invest in a high-growth enterprise like Far Eastern led by a superb management team,” said Ms. Shirley Chen, Managing Director and Head of Private Equity of CICC. “We hope our expertise in capital markets and our understanding of China’s financial services industry and the development of its state owned enterprises, coupled with our network in China, will be helpful for Far Eastern’s future development.’”

read more: KKR Press Release

GIC, a sovereign wealth fund of Singapore, said Tuesday that its investments fell more than 20 percent in the year that ended in March, but recovered more than half that loss during the rally on financial markets since then.G.L.C., or the Government of Singapore Investment Corp., the larger of the city-state’s two wealth funds, said it had increased exposure to alternative investments like real estate and natural resources but was bearish on bonds. The fund said its managers were optimistic about emerging markets and Asia.

The fund’s portfolio shrank by more than a fifth in the year that ended March 31, but it has ridden the financial meltdown better than its sister fund Temasek by paring its exposure to equities before the crisis and through a well-timed sale of part of its Citigroup holding. G.I.C., headed by Lee Kuan Yew, the former prime minister, is the largest sovereign fund in the world after those of Abu Dhabi, Saudi Arabia and Norway, according to Deutsche Bank. The fund says it manages more than $100 billion; analysts estimate the figure at $200 billion to $300 billion.

read more: The New York Times

According to the report, “In recent years, GIC had sought to construct a diversified multi-asset class portfolio by increasing alternative investments such as private equity and real estate. However, this diversification was ineffective in the financial earthquake that occurred last year. The portfolio suffered a loss of more than 20% in Singapore dollar terms in the financial year to 31 March 2009. This loss pulled down the 20-year nominal annual rate of return in Singapore dollar terms from 5.8% to 4.4%. The real rate of return, in excess of global inflation, fell from 4.5% to 2.6%. In US dollar terms, the 20-year nominal annual rate of return was 5.7% as at 31 March 2009.”

read more: GIC Report

According to the Press Release, “Pursuant to CVM Instruction 358 of January 3, 2002, Cyrela Commercial Properties S.A. Empreendimentos e Participações (“CCP”), a commercial property development and leasing company with shares traded on the São Paulo Stock Exchange (BOVESPA) under the ticker CCPR3, informs its shareholders and the market in general that, on July 7, 2009, it entered into an agreement establishing the basis for a joint venture with BRCOMPROP DEVELOPMENT JV PRIVATE LIMITED, an affiliate of GIC Real Estate, the real estate investment arm of the Government of Singapore Investment Corporation (“GIC Real Estate”) and CPPIB US RE-A, INC, subsidiary of the Canada Pension Plan Investment Board, (“CPPIB”), with the purpose of acquiring, holding, developing, building, leasing, managing and selling assets in the retail, industrial and office real estate segment in Brazil (“Joint Venture”).

The investments of GIC Real Estate and CPPIB will be made through CCP18 DE MASTER LIMITED PARTNERSHIP, a company especially set up for this purpose pursuant to the laws of the state of Delaware, United States of America, with CCP Asset Management LLC, a whollyowned subsidiary of CCP, as its general partner (“Company”) being responsible for the allocation and management of the funds committed. The Company, in turn, will directly or indirectly invest, jointly with CCP, in specific purpose companies headquartered in Brazil, which will invest in retail, industrial and office real estate properties.

The investments committed by the parties to achieve the objectives of the Joint Venture total US$ 400 (four hundred) million and will be made in the ratio of 25% by CCP, 37.5% by GIC Real Estate and 37.5% by CPPIB.

This Joint Venture aims to combine CCP’s expertise in the Brazilian commercial real estate markets (office buildings, shopping centers and industrial facilities), with GIC Real Estate’s and CPPIB’s global investment expertise.

This partnership underlines CCP’s commitment to the Brazilian real estate market and its confidence on the growth prospects for the commercial property sector in the country.

read more: Cyrela Commercial Properties S.A – Press Release

Tony Tan

Reuters reports that, “Singapore’s biggest sovereign wealth fund GIC said on Tuesday that the greatest risk facing Asia is a global economic and financial environment that does not stabilise and recover by 2010.

‘If the U.S. economy turns out to be worse than expected, requirements for banks’ capital will be higher and the U.S. administration might need to go back to Congress to ask for additional funding,’ Tony Tan, deputy chairman of the Government of Singapore Investment Corp said in a speech.

‘Downside risks remain high, despite signs of stabilisation,’ he said.”

read more: Reuters

Reuters reports, “The chairman of the Government of Singapore Investment Corp (GIC), the city-state’s biggest sovereign wealth fund, said on Monday the fund will be cautious and take few risks. His comments came after the country’s other sovereign fund Temasek saw big losses on its investments in Western banks.

‘GIC will be cautious, low risk,’ said Lee Kuan Yew in a discussion at an aviation meeting in Malaysia.

Temasek’s new American chief Chip Goodyear would, however, “seize opportunities”, said Lee, Singapore’s former prime minister and the father of current prime minister Lee Hsien Loong. “

read more: Reuters

Reuters reports that, “the Government of Singapore Investment Corp (GIC) said on Tuesday it plans to continue holding its stakes in Citigroup and UBS.

‘GIC is a long-term investor and will continue with its investments in Citigroup and UBS,’ a GIC spokeswoman told Reuters.

Some analysts had expressed concerns GIC and other sovereign funds might follow in the footsteps of Temasek, which sold off its 3 percent stake in Bank of America in the first quarter to realise a hefty loss of at least $3 billion.”

read more: Reuters

According to the Business Standard, “the finance ministry and the Reserve Bank of India (RBI) has asked the Securities and Exchange Board of India (Sebi) to examine whether a proposal by Temasek Holdings and Government of Singapore Investment Corporation (GIC) to increase their stakes in ICICI Bank would trigger the takeover code under which they would have to make an open offer to buy an additional 20%. The Singapore government has sought clarification on a proposal for the two companies to increase their stakes in ICICI Bank to 20 per cent, each holding 10 per cent. This would collectively make them the largest shareholders in the country’s largest private bank. Currently, Life Insurance Corporate is the single largest shareholder with 9.38%. The two Singapore investment vehicles currently hold 10.3 per cent in the bank — Temasek 8 per cent and GIC 2.3 per cent.

Sebi is yet to take a final view on the issue, sources said. The issue hinges on whether the two entities should be treated as one entity or not.”

read more: Business Standard

According to the website, “Tony Tan Keng-Yam, Deputy Chairman and Executive Director, Government of Singapore Investment Corporation (GIC), Singapore, said there would likely be a shake-out in the financial system into two tiers: first, a core of tightly regulated, large commercial banks working with lower levels of leverage than in the past; second, a group of “quasi banks” (private equity, hedge funds, etc.) with a different regulatory structure from commercial banks and no access to the central banks. Investment banks would probably come somewhere in-between, he said. It was normal that governments had intervened to prop up confidence. Now the question was how they would extract themselves in a way that provides incentives to shareholders, who will be necessary for a strong banking sector in the future. He also warned of the dangers of over-regulation stifling creativity.”

read more: World Economic Forum

According to the Economic Times, “The finance ministry has proposed that a key agreement between India and Singapore be amended to prevent two Singapore government-owned investment entities — Temasek and GIC — from together holding more than 10% equity stake in any publicly-traded Indian company.

Under the current SEBI regulations, a foreign institutional investor (FII) cannot hold more than 10% in a single Indian company. Different FIIs owned by a common entity are classified as an FII group and are subject to the 10% cap. GIC and nine wholly-owned subsidiaries of Temasek are registered separately with the market regulator as FIIs, and as they have a common owner, they should have been categorized as an FII group, according to a note prepared by the ministry.

However, the Comprehensive Economic Co-operation Agreement (CECA) signed between the two countries in 2005 treats GIC and Temasek as unrelated and independent entities. It gave Temasek and GIC the right to hold 10% individually in a single company thereby allowing them the option to together increase their shareholding to up to 20% in a company.”

read more: Reuters

Tharman Shanmugaratnam

Reuters reports that, “Singapore’s sovereign wealth funds, the Government of Singapore Investment Corp and Temasek Holdings, outperformed global equity markets in 2008, the city-state’s finance minister said on Monday.

‘Their overall value has fallen by less than the decline in global equity markets, as they maintain diversified portfolios and had taken precautionary actions early in the crisis to reduce their exposures to the equity markets,’ Tharman Shanmugaratnam said in a reply to a parliamentary question, referring to a 42 percent fall in 2008 in the MSCI World equities index.”

read more: Reuters

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Reuters reports that, “The Government of Singapore Investment Corp (GIC) turned down an offer of a seat on the board of UBS AG to assuage concerns the city-state might take control of the Swiss bank, local media reported on Monday, quoting GIC Deputy Chairman Tony Tan.”

Source: Reuters