Government Fund Weekly News Roundup — A Passage to India

November 20, 2015 by Loch Adamson

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Modi
Narendra Modi visits the Sheikh Zayed Grand Mosque in Abu Dhabi


ADIA and PSP Investments eye investments in India. Three Canadian pension funds team up on a big infrastructure deal. GIC, CPPIB and APG build their logistics portfolios.


SWFs’ Indian Investments

Indian President Narendra Modi has been chalking up the air miles recently. Since taking office in 2014, Modi has crisscrossed the globe in an effort to woo foreign capital for Indian construction projects — and sovereign wealth funds are among his targets.

In August, Modi visited the U.A.E., where he met with a delegation from the $621 billion Abu Dhabi Investment Authority (ADIA). Those discussions appear to have borne fruit: ADIA is reportedly set to take a stake in the Indian government's newly-established National Infrastructure Investment Fund, which will focus on transport infrastructure; the fund is also eyeing oil and gas assets in the southern state of Karnataka.

ADIA isn’t the only big government fund that sees opportunities in Indian infrastructure. Ottawa-based sovereign pension manager Public Sector Pension Investment Board (PSP Investments), which manages $84.9 billion in assets, has reportedly agreed to acquire a 49 percent stake in Reliance Energy, the power generation, transmission and distribution business of Mumbai-based Reliance Infrastructure (Rinfra). As part of the Indian conglomerate Anil Dhirubhai Ambani Group, Reliance Energy generates and distributes power to approximately three million customers in the suburbs of Mumbai.

The Oman India Joint Investment Fund, a joint venture between the $34.4 billion State General Reserve Fund of the Sultanate of Oman and the State Bank of India, India's largest lender, has launched a new $200 million private equity vehicle that will invest in India’s consumer retail and telecommunications sectors.

Bucking the SWF trend for financing Indian projects, the $11.1 billion Bahrain Mumtalakat Holding Co. has identified Indian companies as a source of capital for domestic initiatives. This week Mumtalakat signed a joint venture agreement with Indian aluminum maker Synergies Castings that will see the Indian firm develop a new alloy-wheel manufacturing facility in Bahrain.


Canadian Funds Team Up On Mega Toll-Road Deal

In developed markets, rising valuations and fierce competition have encouraged sovereign wealth and pension funds to collaborate on big infrastructure investments — and they don’t come much bigger than the deal announced by a consortium of Canadian pension funds this week.

The $203.7 billion Canada Pension Plan Investment Board (CPPIB), the $55.3 billion Ontario Municipal Employees Retirement System (OMERS) and the $117.8 billion Ontario Teachers’ Pension Plan (OTPP) came together to acquire Skyway Concession Co., the company that runs Chicago Skyway, a toll road that connects downtown Chicago with the city's southern suburbs. The cost? $2.8 billion. Each partner will own a 33.3 percent stake in the Skyway concession after the transaction is completed.

Logistics

As core real estate assets grow ever more expensive, government investors are increasingly investing in sectors such as logistics, which offer better value than prime office properties or luxury hotels. Shifts in consumer dynamics, such as the boom in online shopping — an industry that requires delivery hubs — make the sector look doubly attractive.

Two deals this week illustrated funds’ growing appetite for industrial properties in Asia and Central Europe. A joint venture between Singapore's $343 billion sovereign wealth fund GIC and Philadelphia-based real estate investment manager Exeter Property Group signed an agreement to purchase three logistics properties in Poland from Polish property developer P.A. Nova.

Meanwhile, Canada’s CPPIB and APG Asset Management, which oversees $459 billion for various Dutch pension schemes, have signed an agreement with Chinese real estate developer Shanghai e-Shang Warehousing Services Co. to build logistics facilities in South Korea. The partners will invest an initial $500 million in projects in Seoul and the port city of Busan.



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