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Saudi’s Sovereign Fund is Serious on Infrastructure, Signs MoU with Blackstone




Cash-rich sovereign wealth funds are major participants in the capital-intensive ecosystem of unlisted infrastructure. On his first foreign trip since inauguration day, U.S. President Donald J. Trump is making rounds in the Middle East, starting off in Riyadh. Despite political headaches in Washington D.C. egged on by major T.V. reporters, Trump is keen on having a revitalization effort on crumbling U.S. infrastructure, especially in the areas of airports, roads and bridges. Revealed in the mix of presidential prowess and Saudi royalty, Saudi Arabia’s Public Investment Fund (PIF) plans to commit US$ 20 billion to be an anchor investor in a new US$ 40 billion infrastructure fund to be managed by The Blackstone Group LP, the world’s biggest private equity manager. The infrastructure fund will target rehabilitating and upgrading U.S. infrastructure and support systems. The fund also plans to use debt financing, thus having a potential warchest to invest in US$ 100 billion worth of infrastructure projects primarily in the United States. The Blackstone Group is having Sean Klimczak, a senior managing director at the firm, to run the elephantine infrastructure fund. He has been with Blackstone since 2005. Klimczak had initiated talks with Saudi government officials in April 2016 about a potential infrastructure fund with an unlimited fund term life.

Blackstone Chief Executive Officer Stephen A. Schwarzman and KKR & Co. co-CEO Henry Kravis are also in Riyadh attending the inaugural Saudi-U.S. CEO Forum. Blackstone and PIF, just prior to Trump landing in Riyadh, had signed a non-binding Memorandum of Understanding (MoU). The terms are being finalized. Saudi’s PIF was financially advised by M. Klein and Company, an advisory firm founded by former Citigroup investment banker executive Michael Klein.

Yasir Al Rumayyan, Managing Director of PIF commented in the release that, “The Public Investment Fund’s international investment strategy is built upon establishing strong global partnerships and identifying opportunities to maximize sustainable returns for the people of Saudi Arabia. We look forward to partnering with Blackstone, a recognized leader with a strong record of achievement across its extensive infrastructure projects. This potential investment reflects our positive views around the ambitious infrastructure initiatives being undertaken in the United States as announced by President Trump, and the strategic opportunity for the Public Investment Fund to achieve long-term returns given historical investment shortfalls.”

Blackstone Group President Hamilton James in a release stated, “There is broad agreement that the US urgently needs to invest in its rapidly ageing infrastructure. This will create well-paying American jobs and will lay the foundation for stronger long-term economic growth.”

Cutting Mega Checks

PIF also completed the motions to commit US$ 45 billion to the SoftBank Vision Fund, a massive US$ 90 billion technology investment fund overseen by Japan-based Softbank Group.

Other private equity giants getting into the U.S. infrastructure game with the Trump backdrop are The Carlyle Group, KKR, Oaktree Capital Group LLC and Brookfield Asset Management.

Abu Dhabi Investment Council to Consolidate into Mubadala



UAE President Sheikh Khalifa bin Zayed Al Nahyan issued a groundbreaking law that restructures the Abu Dhabi Investment Council (ADIC) to be under the Mubadala Investment Company group. Under the new law, the Mubadala Investment Company Board of Directors will now become the Board of Directors for the Abu Dhabi Investment Council. Furthermore, ADIC management will continue to run the council. Eissa Mohammed al Suwaidi will continue to lead ADIC as its Chief Executive Officer, and will report to Mubadala Group CEO and Managing Director Khaldoon Khalifa al Mubarak.

In a release, he commented, ADIC becoming part of the Mubadala Group is yet another step in Abu Dhabi’s efforts to accelerate the diversification of the UAE’s economy. With an investment vehicle of significant scale, world-class talent and wide geographical reach, we enhance the country’s competitive position.”

Earlier in 2017, Mubadala Development Company merged with International Petroleum Investment Company (IPIC). This is a trend in Abu Dhabi to create economies of scale within these large state-owned entities.

In 2007, ADIC started operations after it splintered off from the Abu Dhabi Investment Authority (ADIA). A significant portion of ADIC’s holdings include stakes in large financial institutions in the UAE.

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SWFI First Read, March 21, 2018



GIC Lowers Stake in Tesco

On March 19, 2018, Singapore’s GIC Private Limited lowered its stake in Tesco PLC, a supermarket chain, from 3.1% to below 3%.

QuadReal Eyes London Diggs

QuadReal, the re-branded real estate unit of bcIMC, plans to open its first overseas office in London. QuadReal already has offices in Vancouver, Toronto and Calgary.

PGIM Hires Howard Nowell

Howard Nowell was hired by PGIM’s institutional relationship group as a managing director. Nowell is based in London. Nowell will focus on large institutional accounts in the United Kingdom and Europe. Previously, Nowell was a Managing Director focused on U.K. institutional clients at BlackRock.

PGIM is part of U.S.-based Prudential Financial, Inc.

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Franklin Resources to Acquihire Random Forest Capital



Franklin Resources, Inc. acquired San Francisco-based Random Forest Capital, LLC, an investment firm with expertise in data science and non-bank marketplace lending (areas of consumer, residential and commercial credit). Random Forest Capital was formed in 2016 and post-deal will join the Franklin Templeton Fixed Income Group investment team. In April 2017, Random Forest completed its seed round raising US$ 1.75 million from a pool of angel investors. Random Forest is co-founded by Austin D. Trombley, who worked on the data infrastructure and data strategy for online lender Prosper for two years. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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