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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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PSP Investments and Blue Sky Alternative Investments End Strategic Partnership Agreement

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Blue Sky Alternative Investments Limited informed Canada’s Public Sector Pension Investment Board (PSP Investments) that it agreed to terminate its strategic agreement effective March 31, 2019. In December 2017, Blue Sky Alternative Investments forged an agreement with PSP Investments to assist in committing capital in a number of agricultural investments.

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Yield-Hungry Korean Insurance Capital Backs TSX Broadway

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Mirae Asset Daewoo Co., Ltd., the Seoul-based investment banking firm, has provided a US$ 375 million loan for a redevelopment in New York’s Times Square. It joins L & L Holding Company, Maefield Development, and Fortress Investment Group who are bringing the development known as TSX Broadway to life. The building is at 1568 Broadway in Manhattan. TSX Broadway, a US$ 2.5 billion project when all equity financing is added in, will allow for renovations and expansion of the 46-storey building. An LED screen, which is not an uncommon sight in the Big Apple, will wrap around the corner of the tower. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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OFFICIALS: Saudi Crown Prince Denies Interest in Acquiring Manchester United

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The Saudi Arabian government dispelled rumors that Saudi Crown Prince Mohammed bin Salman will acquire football club Manchester United. However, Saudi Arabia’s Public Investment Fund (PIF) had talks regarding sponsorship with the football club. Manchester United signed a partnership deal with Saudi Arabia’s General Sports Authority in 2017.

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