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Asian Sovereign Wealth Funds Go Big in Europe

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Sovereign wealth funds are comfortable investing directly into Europe. Given geopolitics, the investment environment and a deep history with Asia and the Middle East, Europe maintains its status as a center for sovereign wealth assets. By analyzing the top 25 sovereign wealth funds ranked by assets, a significant portion of them have European operations, particularly in London.

Across the pond, sovereign wealth funds are also heavily allocated to the United States, but not directly. In the U.S., with the exception of institutional real estate, sovereign wealth funds extensively use intermediaries and local partners to channel their monies. This approach directly contrasts that of their European investments.

Direct Sovereign Wealth Fund Transaction Amounts by Recipient Country (Last Four Quarters)*
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SWFDirect_country_11.5.13_SWFTD_rsd

Period: 3QY2011 to 2QY2012
Source: Sovereign Wealth Fund Transaction Database (Sovereign Wealth Fund Institute)

Data Table

Country Billions USD
United Kingdom 18.9
Germany 7.73
France 2.74
Switzerland 2.63
Russia 1.91
Spain 1.38
United States 5.48

 

It is interesting to note that despite apparent cracks in European financial stability, sovereign funds continue to favor Europe, picking up real estate properties in London, Paris and other prime locales. Singapore’s two sovereign wealth funds, GIC Private Limited and Temasek Holdings, have augmented their presence in European investment affairs. Just in the past few months, GIC Private Limited became the second largest private shareholder of Royal Mail plc. The Singapore wealth funds also invested in Rothesay Life – getting exposure to the insurance sector. Broadgate, the massive London office and retail complex, was courted by the GIC. This is not a recent phenomenon – Asian sovereign funds made key inroads into Europe during the global financial crisis. They provided liquidity to European institutions like UBS, Barclays and Credit Suisse.

The Korean peninsula hosts a number of mega asset owners such as the Korea Investment Corporation (KIC) and Korea’s National Pension Service (NPS). Both opened up London offices. The trend of Asian public investors wanting greater exposure to European real estate, fixed income, equities and infrastructure is growing. For example, Korea’s NPS, the fourth largest pension investor in the world, moved billions into the UK by investing in assets such as London’s Gatwick Airport and Canary Wharf. The China Investment Corporation (CIC) and Qatar Investment Authority (QIA) mirrored these investments.

Similar deals and transactions akin to these abound. The take away message is this: there is a conspicuous and increased level of investment in Europe particularly by Asian funds. And, more notably, these funds are willing to invest directly – as opposed to using intermediaries – into these various assets.

KIC in Talks to Buy a Portfolio of Amazon European Warehouse Assets

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The Korea Investment Corporation (KIC) is in discussions on buying some logistical assets in Europe. Amazon.com (Amazon) is selling a portfolio of three, multi-storey warehouses for approximately €400 million. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Alibaba Invests in Series C in 1919 Wines

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On October 18, 2018, Alibaba Group Holding Limited, through Alibaba (China) Network Technology Co., Ltd, invested some 2,000,000,065.08 RMB (US$ 288,447,000) for 39,277,299 shares in a Series C round into 1919 Wines & Spirits Platform Technology Co., Ltd., a Chinese alcohol beverage e-commerce retailer. Post-deal, Alibaba owns about 29% of the company shares and became the second largest shareholder of 1919 Wines. The transaction values 1919 Wines at 7 billion RMB.

GF Securities Co., Ltd. advised 1919 Wines on the transaction.

Formed in 2010, 1919 Wines is based in Chengdu. 1919 Wines owns retail portals, phone apps, and offline stores.

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Nomura and CIC Contemplate Joint Investment Fund

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Japan-based Nomura Holdings is in talks with the China Investment Corporation (CIC) on forming a new investment fund. The fund could be receive commitments up to US$ 1 billion. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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