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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)*
Click to Enlarge
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.

Saudi Aramco Contemplates SABIC Stake from PIF

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Oil giant Saudi Aramco is in early discussions on whether to pursue an ownership stake in Saudi Basic Industries Corporation (SABIC) from the Public Investment Fund (PIF). At the moment, Saudi Aramco has no plans to buy publicly-held shares of SABIC. SABIC was founded in 1976 by Saudi royal decree to convert oil by-products into useful chemicals, polymers, and fertilizers.

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SWFI First Read, July 19, 2018

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GIC Eyes Provenance Land

GIC Private Limited is nearing a deal to purchase up to 50% of Provenance Land. Provenance Land owns India’s first Four Seasons hotel.

Eduard van Gelderen Leaves UC Regents for PSP Investments CIO Role

Eduard van Gelderen exited his position as Senior Managing Director at the University of California Regents’ Office of the Chief Investment Officer. His role will not be replaced. He accepted an offer to be Chief Investment Officer of the Public Sector Pension Investment Board (PSP Investments).

PAAMCO Prisma Holdings CEOs to Exit

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Google Fined Big Time by EU Regarding Antitrust Violations

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The European Union (EU), through its competition commissioner, levied a €4.34 billion fine against Alphabet Inc., the owner of Google. The fine is over Google having “imposed illegal restrictions on Android device manufacturers and mobile network operators to cement its dominant position in general internet search,” according to the European Commission (EC).

The European Commission is requiring Alphabet to cease from its conduct that it is accused of within 90 days or face penalty payments of up to 5% of the average daily worldwide turnover of Alphabet, Google’s parent company.

Commissioner Margrethe Vestager, in charge of competition policy, said in a press release, “Today, mobile internet makes up more than half of global internet traffic. It has changed the lives of millions of Europeans. Our case is about three types of restrictions that Google has imposed on Android device manufacturers and network operators to ensure that traffic on Android devices goes to the Google search engine. In this way, Google has used Android as a vehicle to cement the dominance of its search engine. These practices have denied rivals the chance to innovate and compete on the merits. They have denied European consumers the benefits of effective competition in the important mobile sphere. This is illegal under EU antitrust rules.”

The EC press release added, “In particular, Google: 1. has required manufacturers to pre-install the Google Search app and browser app (Chrome), as a condition for licensing Google’s app store (the Play Store); 2. made payments to certain large manufacturers and mobile network operators on condition that they exclusively pre-installed the Google Search app on their devices; and 3. has prevented manufacturers wishing to pre-install Google apps from selling even a single smart mobile device running on alternative versions of Android that were not approved by Google (so-called “Android forks”).”

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