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Effects of Utilizing Sovereign Co-Investors for Private Equity Firms

Significant direct investment in companies is becoming a more common occurrence for sovereign investors. Sovereign funds that have typically allocated capital to private equity firms to manage are wanting in on the deals themselves. We even find special situations in where the sovereign wealth fund takes a substantial ownership stake in the private equity firm. This benefits the private equity firm by receiving governmental capital, enhancing future fund raising prospects, and increasing firm liquidity for fund management.  Earlier this year, the Kuwait Investment Authority (KIA) and the Government of Singapore Investment Corp purchased a stake in TPG.

There is a rising trend among some large sovereign wealth funds and other long-term public pensions regarding co-investing alongside private equity funds or themselves on direct company purchases. One example includes the case of Temasek Holdings that purchased a large stake in Frac Tech Holdings alongside RRJ Capital in April 2011. Together they bought a 70% stake in the Frac Tech Holdings.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

SouthGobi’s CEO Arrested, CIC Struggles with Investment

The China Investment Corporation (CIC) has long struggled with its investments in coal assets, specifically in globally-listed coal miner SouthGobi Resources Ltd, which operates its flagship coal mine in Mongolia. In November 2009, CIC and SouthGobi Resources inked a convertible debenture deal. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Qatar Central Bank Deals with MSCI

MSCI, a stock index company whose benchmarks influence investor behavior, has tremendous indirect power impacting the stock markets of smaller economies. In 1988, MSCI released its emerging markets index, a now-widely-used benchmark for many institutional investors wanting access to growth markets. China and South Korea make up the majority of the benchmark, but smaller economies such as Poland, Chile and even Qatar make up other pieces of it.

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bcIMC Buys into Bottling Business with PAI in €1.623 Billion Takeover of Refresco

Dutch soft-drink bottler Refresco Group N.V. has agreed to a buyout offer for all 81.2 million of its shares from French private equity firm PAI Partners SAS (PAI) and Canadian pension manager British Columbia Investment Management Corporation (bcIMC) in exchange for €20 in cash per ordinary share for a total consideration of €1.623 billion. Refresco’s major shareholders, which includes 3i Group, and shareholding members of its boards, who represent 26.5% of outstanding shares, have said they stand behind the deal.

Refresco’s board rejected an initial offer from PAI in April 2017 of €1.4 billion, which they felt did not adequately capture the value added by their plans to bolster its presence in North America through the acquisition of Canadian bottler Cott TB, a deal that went through in July for US$ 1.25 billion.

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