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Top 10 Sovereign Wealth Fund Game-Changers of 2013

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top10Overall, institutional investors fared well in 2013, performance wise. 2013 was a boon for sovereign wealth funds and public pensions with allocation to developed market public equities. On December 31, U.S. stocks closed 2013 at records. For example, the S&P 500 index recorded its biggest annual move in 16 years. Next, the shale revolution, opening of Mexico’s energy industry and rising cheapness on the price of renewable energy will have an impact on Gulf sovereign wealth fund growth. Our staff has constructed a list of the top ten game-changers that will set the tone for sovereign wealth funds in 2014.

10.) More Private Equity, Please

In this QE world, more public investors are clamoring for allocation to private equity. Sovereign funds are stepping up commitments to specialist funds and regional private equity funds. The mega PE players are raising larger funds reminiscent of 2007, just look at the recent KKR and Blackstone fund raises in 2013. The other apparent trend is that public funds are looking to limit the number of PE relationships, which could greatly affect mid-sized to smaller private equity firms.

9.) Capturing Returns

2013 was the year that many sovereign funds collected their bounty by unloading from positions made during the global financial crisis. The China Investment Corporation sold positions in General Growth Properties and restructured their holdings in energy player AES Corp. Back in February 2013, Singapore’s GIC Private Limited sold more shares in their holdings of Global Logistic Properties. At year-end, NWS Holdings Ltd., a vehicle owned by Hong Kong billionaire Cheng Yu-tung, purchased a stake from the GIC in Beijing Capital International Airport Co. – giving the Singaporean sovereign fund a nice return on investment.

8.) Logistics and Industrial Properties

Logistical properties peaked sovereign wealth fund interest. Norway’s sovereign fund embarked on two landmark deals with Prologis on acquiring a portfolio of logistical properties in both the United States and Europe. In their European deal, the Prologis-NBIM joint venture acquired a portfolio of 195 Class-A logistics facilities wholly owned by Prologis.

In March 2013, in the United States, the California Public Employees’ Retirement System (CalPERS) created a partnership with Bentall Kennedy to pursue U.S. core industrial properties. Singapore’s GIC, CPPIB and the China Investment Corporation allocated more assets on logistical properties in Asia.

7.) Direct Energy and Utility Investments

In 2013, increasingly, sovereign funds have been buying up direct energy assets. For example, in March 2013, Singapore’s Temasek Holdings augmented their stake in Repsol SA. Repsol is Spain’s largest oil company.

According to the Sovereign Wealth Fund Institute’s transaction database, from the beginning of 2008 till August 2013, over US$ 76.3 billion has been directly invested in energy-related assets and companies. This illustrates the story of a five-year trend of sovereign wealth funds plowing billions into energy – betting heavily on world energy demands. The US$ 76.3 billion includes energy companies, exploration firms, utilities and energy-related infrastructure. This does not include energy-related technology companies or real estate.

Direct Energy Transactions by Quarter

Period Billions USD
Q1 Y2013 2.20
Q2 Y2013 0.13
Q3 Y2013 0.88
Q4 Y2013 2.81
Total 6.03

Source: Sovereign Wealth Fund Transaction Database

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SWFI First Read, June 21, 2018

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PSP Investments Nears Deal on Azelis

PSP Investments and EQT Partners (through fund EQT VIII) are in exclusive talks to acquire Belgium-based Azelis S.A. from funds managed by Apax Partners. Formed in 2001, Azelis is a specialty chemicals and food ingredients distributor. The transaction is subject to regulatory approvals.

Oxford Properties Wins Rights on Barangaroo Office Development

Melbourne-based Grocon Pty Ltd selected Oxford Properties, the real estate unit of OMERS, as a preferred partner for it’s a A$ 2 billion, 5.2-hectare Barangaroo Central project development. This is an office tower development. Oxford Properties essentially won the rights toward the project (rumored at a price of A$ 100 million), freeing the developer from a high-cost finance deal with Maxcap, a lender.

Investment Management Corporation of Ontario Selects Jean Michel as CIO

The Investment Management Corporation of Ontario named Jean Michel as chief investment officer. This role is effective July 3, 2018. Michel was executive vice president, advisory services to depositors and strategic analysis, at Caisse de Depot et Placement du Quebec (CDPQ).

Wil Warren Named President of Lexington Partners

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Large Public Asset Owners Commit to Goodman Brazil Logistics Partnership

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Canada Pension Plan Investment Board (CPPIB) unveiled plans to commit 500 million BRL (C$ 175 million) in equity for a 20% interest in the newly established Goodman Brazil Logistics Partnership to invest in prime logistics and industrial assets in the key gateway cities of São Paulo and Rio de Janeiro. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Mubadala Supports Two European Aquaculture Transactions

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Mubadala Investment Company is keen on growing exposure to agribusinesses whether in farming or aquaculture. With money from Mubadala and AMERRA Capital Management LLC, Andromeda Group acquired Nireus SA (at 74.34% stake) and Selonda SA at (79.62% stake), two European aquaculture companies that focus on sea bream and sea bass. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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