Government Fund Weekly News Roundup: British Real Estate in Demand

March 11, 2016 by SWC Editors

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Student digs 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.

Indian Investments

Canada’s 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.

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