Government Fund Weekly News Roundup: SWFs Battle for Australia’s Asciano

February 19, 2016 by SWC Editors

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Australia Train

Photograph: Simon Pielow

In the news this week: Big institutional investors compete for Australian transport operator Asciano. The Canada Pension Plan Investment Board creates a logistics-focused joint venture in Japan. And government funds in Singapore, Nigeria and Saudi Arabia target healthcare investments.

Bidding War for Asciano

In Australia, big institutional investors are slugging it out for Melbourne-based railway and seaport operator Asciano.

In the red corner: Australian logistics company Qube Holdings, which is leading a consortium comprising the Canada Pension Plan Investment Board (CPPIB), China Investment Corp. and New York-based infrastructure firm Global Infrastructure Partners. In the blue corner: Toronto-based infrastructure group Brookfield Asset Management, which is backed by the Qatar Investment Authority (QIA) and Canada’s Public Sector Pension Investment Board (PSP Investments).

In August 2015, Brookfield and its previous deal partner, Singapore’s GIC, made an offer of A$8.9 billion ($6.6 billion) for Asciano. Despite the approval of Asciano’s board, the deal was repeatedly postponed — and the delay enabled the rival Qube-led consortium to step in. Qube and its partners acquired a 20 percent stake in Asciano in late 2015 and submitted an offer worth A$9 billion for the remaining shares in January, outbidding Brookfield and GIC by $0.15 per share. Asciano’s board recommended this offer to shareholders on February 16.

This looked to have delivered a knockout blow to Brookfield’s hopes of winning the asset. But like a boxer rising to his feet to beat the count, the Canadian company reportedly increased its own bid on February 17, securing new backing from QIA and PSP Investments after GIC withdrew from the fray. Asciano’s board will now choose between the two offers.

The escalating sums reported in the battle for Asciano speak to government investors’ strong appetite for Australian infrastructure assets. The country's cheap debt financing, its transparent regulatory environment and strong economic fundamentals — Australia’s population is growing fast, a rarity among developed nations — are among the factors luring long—term investment in Australian hard assets.

CPPIB and NPS Invest in Logistics

Global logistics facilities are increasingly popular among government funds, as the growth of e-commerce propels strong demand for delivery hubs in many markets.

This week CPPIB and Singapore-listed Global Logistics Properties announced their second joint venture in the Japanese logistics sector. The partners will commit a total of 100 billion yen ($877.8 billion) to GLP Japan Development Venture II, which will finance the construction of logistics facilities in Japan from 2016. The partners have pledged to commit further capital to the venture over the next three years and expect it to reach $2 billion in equity by 2019.

The European logistics sector is a target for South Korea's National Pension Service (NPS). The fund has teamed up with German private equity fund ADF to buy a logistics property in Hamburg for $120 million. Currently, Swedish fashion retailer H&M leases the property and uses it as a distribution center. NPS and ADF bought the asset from Vienna-based property manager CA Immobilien Anlagen.

Healthcare Investments

Singapore’s Temasek Holdings has long been an investor in innovative healthcare technology companies — and the organization disclosed two new such investments this week. According to the organization's latest filings with the U.S. Securities and Exchange Commission, Temasek purchased a $20 million stake in San Diego-based genetic analysis firm Illumina and a $31.6 million stake in Tarrytown, New York—based biopharmaceutical company Regeneron Pharmaceuticals in late 2015.

Two other government investors are aiming to support healthcare industries in their domestic economies. The Nigeria Sovereign Investment Authority has struck an agreement with the World Bank Group's International Finance Corp. to collaborate on boosting investment in Nigeria's healthcare sector by facilitating public-private partnerships. And in Saudi Arabia, Sanabil Investments, a unit of Saudi Arabia's state-owned Public Investment Fund, has reportedly bought a 20 percent stake in Ebrahim Mohammed Almana & Brothers Co., the parent company of Saudi healthcare chain Almana General Hospitals.


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