Government Fund Weekly News Roundup: British Real Estate in Demand
Ardent student accommodation, Birmingham
In the news this week: Singapore’s Temasek invests
in the British student accommodation sector. The Canada Pension
Plan Investment Board finances an ambitious real estate project
in Birmingham. And Quebec’s Caisse de
dépôt opens a new Indian office.
Temasek Moves into Student Accommodation
Student accommodation: The phrase conjures up images of empty
beer cans and piles of dirty laundry. But never mind the
squalor — student digs are big business. Demand for
graduate and undergraduate housing is rising in the U.K. as
increasing numbers of international students apply for degrees
at the country’s universities.
Government funds are seeking to profit from this trend. This
week, for example, Mapletree Group, a wholly-owned real estate
subsidiary of Singaporean state investor Temasek Holdings, acquired the Ardent
Portfolio from Guernsey-based investor International Mutual
Fund for a cool £417 million ($594 million). The
portfolio, comprising 25 student residences across the U.K.,
contains a total of 5,500 potentially messy — and
profitable — rooms.
Temasek is not the only fund that sees value in the British
student accommodation sector. In March 2015, the Canada Pension Plan Investment Board
(CPPIB) paid £1.1 billion for the Liberty Living
portfolio, which comprises 2,153 rooms in five major university
cities: London, Manchester, Newcastle, Bristol and Cardiff.
CPPIB’s Brum Deal
The regional spread of the student residences targeted by
Temasek and CPPIB speaks to another trend. Many government
funds deem London property overvalued and are now looking
beyond the British capital for real estate opportunities.
CPPIB has shown particular interest in Birmingham, the
U.K.’s second-largest city. Reports in the British
press this week indicated the fund is in talks to buy a 50
percent stake in the ambitious £500 million scheme to
convert the Paradise Circus area of Birmingham into a mixed-use
space, including office buildings and a hotel. London-based
property developer Argent is carrying out the project, which
should be completed by 2025.
The proposed deal would be CPPIB's second in Birmingham this
year. In February, the fund formed a 50-50 joint venture with
British retail-development manager Hammerson to acquire the
Grand Central Shopping Centre in the city; CPPIB paid
£175 million for its stake in the mall.
Caisse de dépôt et placement du Québec
(CDPQ) is the latest government fund to open an office in
India. On Thursday, CDPQ announced that Anita Marangoly George,
formerly a senior director at the World Bank Group, will head
up the office in New Delhi. In a statement, CDPQ said its
strategy in India will focus on the country’s
renewable energy sector.
Singapore’s GIC has long had a presence in India. This
week the fund participated in a financing round for
Bengaluru-based bank Janalakshmi, which specializes in
micro-lending services. GIC invested alongside Forth Worth,
Texas-based private equity firm TPG and funds managed by global
financial services firm Morgan Stanley.
Mumtalakat Invests in Private Equity
It was a busy week for the Bahrain Mumtalakat Holding Co., the island
kingdom’s $11 billion sovereign wealth fund.
Mumtalakat acquired a 49 percent stake in Spanish aluminum
manufacturing company Asturiana de Aleaciones S.A., known as
Aleastur. The firm specializes in the production of aluminum
grain refiners and master alloys for smelters and casting
operations. Mumtalakat also acquired a minority stake in
Dubai-based firm Gulf Cryo, which produces gases for industrial
use, for an undisclosed sum.