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

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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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Public Asset Owners Feel Pressure on PetSmart

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Paying big fees compared to traditional equity strategies, sovereign funds and pensions have allocated mounds of capital to private equity firms on buying out North American big-box retail businesses. Many of these private equity firms and advisory firms have also offered “co-investment” opportunities in these retail acquisitions as well. Private equity firms had loaded retailers such as Toys “R” Us and Sports Authority with excessive debt. Sports Authority shuttered in 2016.

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Mubadala Sells Stake in Local Ports Operator

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Abu Dhabi-based Mubadala Investment Company and its emerging markets infrastructure arm, Mubadala Infrastructure Partners, are parting ways with Abu Dhabi Terminals (ADT), selling their 50% combined stake in the hometown shipping operator to remaining shareholder Abu Dhabi Ports (ADP) for an undisclosed amount. Khaled Al Qubaisi – Chief Executive of aerospace, renewables, and information technology at Mubadala – expressed in a statement his confidence in ADT’s future success as a key player in the local economy.

Established by government decree in 2006 alongside its new owner as part of Abu Dhabi’s Vision 2030 plan for economic development, ADT primarily operates the semi-automated Khalifa Port Container Terminal under a 30-year concession it secured in 2012 from ADP, which is mandated to develop and manage all 11 commercial ports in the emirate and hosts some 25,000 vessels every hour.

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SWFI First Read, April 26, 2018

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Former Obama Cabinet Officials to Advise TPG Rise Fund

Former U.S. Secretary of State John Kerry was named a senior advisor for TPG’s Rise Fund. Kerry’s role will be to help find investments for the fund and advised in areas such as renewable energy. Another Obama administration veteran, former U.S. Secretary of Education Arne Duncan, is also an advisor to the Rise Fund.

Jobless Claims in U.S. Drop to the Lowest Level in 48 Years

According to the U.S. Department of Labor, the rate of layoffs in the country fell in late April to the lowest level since 1969.

ECB Holds Rates Steady

The European Central Bank (ECB) kept interest rates unchanged on April 26, 2018.

Singulato Motors Raises Series C Round

Singulato Motors raised US$ 474 million in a Series C round from a number of investors. Some current backers include TaoYun Beijing Investment Fund, GX Capital and Qihoo 360. Singulato Motors is a Chinese electric vehicle startup.

Thae Khwarg Nears CIO Role at Korea National Pension Service

Thae Khwarg appears to be the top contender for the Chief Investment Officer role at Korea’s National Pension Service. Khwarg is the former head of Baring Asset Management Korea, which is formerly known as SEI Asset Korea. Khwarg was selected by NPS’ chairman for the role and is awaiting approval from South Korea’s Minister of Health and Welfare.

Al Hilal Bank Uncovers Internal Fraud

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