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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. ]

Asian Sovereign Funds Not Slowing Down on Tech Investing

According to data from SWFI’s Sovereign Wealth Fund Transaction Database, Asian sovereign funds invested US$ 6.05 billion directly into companies and assets in the information technology sector from Jan 2017 to November 22, 2017. In a comparable time frame from Jan 2016 to November 22, 2016, this same group of Asian sovereign funds directly invested US$ 5.02 billion in the sector. These are direct investments, not fund commitments or manager allocations.

Asian sovereign funds such as GIC Private Limited, Temasek Holdings and the Korea Investment Corporation (KIC) have demonstrated bullish signals to the technology community over other sectors. GIC and Temasek have also been major investors in the private side of deals, funding a wide range of tech startups, while providing financial firepower in buyout transactions.

Some notable direct tech investments in 2017 by sovereign funds include Meituan-Dianping, SoundCloud, Nets A/S, Visma AS, Turn, Inc. and Vantiv.

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Future Fund Makes a Guardian Out of Former J.P. Morgan ANZ Chair

The Australian government has appointed Robert Priestley – current non-executive chair of J.P Morgan for Australia and New Zealand (ANZ) and a non-executive director of ASX – to serve on the Future Fund Board of Guardians for a five-year term from November 7, 2017. Priestley replaces former Morgan Stanley Australia chief executive Steven J. Harker.

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Associated British Ports Reboots Property Development Arm to Capitalize on Land Bank

Associated British Ports (ABP) – operator of 21 major ports throughout the United Kingdom – has announced a reboot of its ABP Property division, complete with a new team of specialists in commercial development and logistics led by Huw Turner, in order to identify and develop strategically significant locations in its 2,372 acre land bank.

ABP is owned in large part by a consortium of pensions and sovereign funds, including the Canada Pension Plan Investment Board (CPPIB) at 33.88% ownership, OMERS at 30%, Singapore’s GIC Ventures Pte Ltd at 20.00% ownership, and the Kuwait Investment Authority at 10.00% ownership. Large institutional investors such as sovereign funds, pensions, and endowments have slowly increased allocation towards infrastructure over the past six years as an alternative to equities and bonds, according to asset allocation data from SWFI.


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