Funds
In 2013 sovereign wealth funds favored established buyout
managers focused on developed markets. Among them: London-based
CVC Capital Partners, which closed its sixth fund in July, and
New York–based Apollo Global Management, which closed
its eighth fund in December.
As far as we can tell from the relatively opaque world of
private equity, sovereign funds committed capital not just to
well-established buyout shops but also to country or sector
specialists that generate alpha by exploiting their deep
knowledge of specific market niches. Sovereign
funds’ private equity allocations included
country-specific funds in India and Russia, and funds run by
specialist firms that invest in currently challenging markets
such as commodities and energy.
Principal Investments
Sovereign wealth funds made direct investments in a wide
range of private companies last year. They tended to target
relatively difficult sectors where they want to be closely
involved in managing the investment. For instance, sovereign
funds made seven allocations worth a total of $1.4 billion
to privately held commodity and energy companies.
Notably, China Investment Corp. committed C$292 million
($285 million) to a subsidiary of Chengdu Tianqi Industry
Group Co., a Chinese company whose Sichuan Tianqi Lithium
Industries is the world’s largest
hard-rock-lithium converter. The investment allowed Tianqi
Lithium to purchase its raw-material supplier,
Australia’s Talison Lithium, which owns and runs
mining projects in Western Australia and Chile.
SWF Direct Private Equity Investments
in 2013
The Qatar Investment Authority (QIA) backed PKC Management
(UK), a vehicle established by former JPMorgan Chase & Co.
minerals experts Lloyd Pengilly and Roger Kennedy to seek out
mining deals in Africa and South America, with a reported
$250 million. QIA’s direct-investment arm,
Qatar Holding, invested alongside Jan Kulczyk,
Poland’s richest man; Brazilian investment bank
BTG Pactual; and New York–based hedge fund manager
Och-Ziff Capital Management Group. PKC changed its name to QKR
Corp. Management (UK) to reflect the composition of its new
shareholders and made its first investment in February 2014,
agreeing to buy Johannesburg–based AngloGold
Ashanti’s Navachab gold mine in Namibia.
Asian sovereign funds made five investments with a total value
of $142 million in early- and growth-stage technology
companies. Notably, Malaysia’s Khazanah Nasional
formed a joint venture with Usaha Tegas, which is controlled by
Malaysian businessman Ananda Krishnan, to buy a 30 percent
stake in Academy Award–winning, U.K.-based visual
effects company Framestore. In the same vein, we saw sovereign
funds fully embrace e-commerce: Singapore’s
Temasek Holdings invested in BreadTrip, a smartphone
application that allows users to share photos and accounts of
their travel experiences and tag their locations, and
Jacksonville, Florida–based sports apparel online
retailer Fanatics, while QIA backed Paris-based discount
fashion auction site Vente-Privee.com.
Percentage of Total Value of Private Market
Investments
Source: Sovereign Wealth Center.
Percentage of Total Number of Private Market
Investments
Source: Sovereign Wealth Center.