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 $6.5 billion. By late June 2013, Norway’s sovereign wealth fund owned a little more than 3 percent of BASF SE, the world’s largest chemical company. Another German chemical company in which the wealth fund owns a growing stake is The Linde Group.
Private equity firm BC Partners hired Goldman Sachs Group Inc. and JPMorgan Chase & Co. to advise on the sales of Acuris. Acuris is a collection of financial news and data sites, which includes Mergermarket, Dealreporter, and Debtwire. In 2017, BC Partners sold around a 30% stake in GIC Private Limited.
Before the rebranding to Acuris, Mergermarket was part of The Financial Times Group until 2013 when it was sold off to BC Partners.
Aflac Inc. is an American insurance company founded in 1955. The company is the biggest provider of supplemental insurance in the United States. Aflac also has major operations in Japan.
In December 2018, Japan Post Holdings (JPHLF) signaled it was spending US$ 2.64 billion for a 7-8 % stake in Aflac. The goal is that, in four years time, Aflac will become an affiliate of Japan Post. Japan Post hopes to accomplish this by becoming the largest voting shareholder of the company. The world’s 13th largest company, with 400,000 employees, Japan Post needs to expand to chase further growth, mainly because Japan Post expects the postal business to decline. Diversification is seen as the optimal route to long term stability for the holding company. Japan’s economy is worrying. Japan’s aging population means that many insurance companies are facing a shrinking customer base, Japan Post settled on a plan to expand overseas.
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The Russian Direct Investment Fund (RDIF) and the Development Agency of Serbia, also known as Razvojna agencija Srbije, reached an agreement to work together to identify attractive investment projects to strengthen bilateral economic ties and increase investment flows between Russia and Serbia. Russian capital and businesses are keen on investing in Serbia.
In addition, the two countries signed an agreement to cooperate on civil nuclear energy, according to state-owned Russian reactor builder Rosatom (Rosatom State Nuclear Energy Corporation). Rosatom continues to expand it business of nuclear cooperation deals in a wide number of countries.
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