The thirst for real assets has not abated for sovereign wealth funds. Clear statistics derived from the Sovereign Wealth Fund Institute’s transaction database sheds light on the impact sovereign wealth funds have in acquiring investments in the real asset economy. The Sovereign Wealth Fund Transaction Database has recorded over $600 billion worth of direct transactions made by sovereign funds. The increase in direct transactions reveals that large institutional investors like sovereign wealth funds have built up sufficient internal capacity to go out on their own. For the time being, there is no slowdown in sovereign wealth funds investing in real assets.
European core real estate is a chief driver for direct sovereign wealth fund transaction growth. $9.26 billion in direct sovereign wealth fund transactions were recorded in institutional real estate for the last half of 2012. In comparison, to the last half of 2011, $7.13 billion worth of direct transactions were recorded. Let’s not let Europe hog all the glory, Norway’s Government Pension Fund Global (GPFG) purchased 49.9% of five U.S. office properties through a joint venture with TIAA-CREF – properties were valued at $1.2 billion. A secondary cause of the increase is the proliferation of sovereign wealth funds being engaged in developmental real estate – particularly with Gulf funds. Hudson Yards and CityCenterDC, two monstrously large U.S. developmental projects are examples of major deals.
Source: Sovereign Wealth Fund Transaction Database, August 2013
In the majority of cases, acquiring infrastructure without intermediaries takes longer than buying property. A smidge after the first quarter of 2013, Tawreed Investments Limited, a sovereign wealth enterprise of the Abu Dhabi Investment Authority, was part of a consortium including Industry Funds Management, Australian Super and QSuper to buy the lease on Port Botany and Port Kembla. Combined, the two port deals equaled AUD 5.07 billion.
For the time being, there is no slowdown in sovereign wealth funds investing in real assets.
Energy and Materials
Spiking in the first semester of 2012, energy-related transactions amounted to $7.53 billion. Singapore’s Temasek Holdings invested hundreds of millions in KrisEnergy, an upstream oil and gas company focusing on Southeast Asia. KrisEnergy started as a portfolio company backed by First Reserve Corporation. Shifting to material-related transactions, in the first half of 2013, it totaled $6.5 billion. By late June 2013, Norway’s sovereign wealth fund owned a little more than 3 percent of BASF SE, the world’s largest chemical company. Another German chemical company in which the wealth fund owns a growing stake is The Linde Group.
Dr Dan Matjila, the Chief Executive Officer of the Public Investment Corporation (PIC) of South Africa, plans to resign according to South Africa’s finance ministry, which oversees the organization. The finance ministry commented that PIC’s board was dealing with Matjila’s intentions. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]
International Petroleum Investment Company (IPIC), which is now wrapped up into Abu Dhabi-based Mubadala Investment Company, is suing Goldman Sachs over its role in the 1MBD international corruption scandal. IPIC, through its unit Aabar Investments, was once an investment partner of 1Malaysia Development Berhad (IMDB). In the lawsuit, Aabar believes Goldman Sachs conspired with others to bribe both IPIC and Aabar Investment former executives. SWFI and other media outlets have written extensively on the matter.
In the fall, the U.S. Department of Justice (DOJ) already unsealed criminal charges against key players in the massive fraudulent scheme, while Malaysian government officials have jailed its former prime minister Najib Razak.
Lloyd Blankfein, the recent former CEO of Goldman Sachs, attended a 2009 meeting with Malaysian financier Jho Low (name: Low Taek Jho). According to various media sources, Blankfein is the unidentified Goldman executive who attended the 2009 meeting in New York in the U.S. court documents.
Goldman Sachs faces a plethora of lawsuits and regulatory probes stemming from its involvement in the 1MDB scandal.
Remember the days of experts talking about peak oil. The peak oil concept is the point in which the global petroleum production rate starts its inevitable historic decline. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]
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