Sovereign Wealth Fund Weekly News Roundup: GIC Buys Global Real Estate

March 27, 2015 by Loch Adamson

SWF weekly news roundup: GIC buys global real estate
SWF weekly news roundup: CIC to invest in Russian agriculture?
SWF weekly news roundup: GIC and QIA vie for slice of U.K. telecom market
  • Print
  • Please login

GIC dominated the news this week. The Singaporean fund invested in European infrastructure and Indian real estate — and has reportedly moved into pole position for a multi-billion dollar slice of Hutchison Whampoa’s massive new U.K. telecom business.

It’s been a busy week for GIC. On Monday the fund announced that it has formed a new €300 million ($324.6 million) joint venture with Philadelphia-based real estate investment manager Exeter Property Group to invest in logistics properties — mainly distribution hubs — across Europe. GIC has been ramping up its investments in logistics as it seeks to profit from shifts in consumer dynamics, such as the boom in online shopping, which requires delivery centers. Last month it teamed up with Singapore’s Global Logistics Properties to buy Chicago-based real estate investment trust IndCor Properties from funds managed by New York–based Blackstone Group for $8.1 billion.

GIC’s joint venture with Exeter is just the latest in a number of sovereign wealth fund deals in European infrastructure. Fierce competition is pushing up valuations across the sector — and GIC is one of several funds scouring the market for more lucrative, value-added assets. One increasingly common strategy sees funds investing in so-called greenfield projects, taking on some construction risk in return for higher yields.

GIC has also adopted this strategy in London’s expensive real estate sector. In December 2013, the fund teamed up with real estate investment trust British Land to buy the Broadgate office complex near Liverpool Street station for £1.3 billion ($2.1 billion). The partners are currently redeveloping the site to add more office and retail space and this week they formed a new holding company, Broadgate REIT, for the 50-50 joint venture that manages the project.

GIC has also been adding to its emerging-markets real estate portfolio. On Monday the fund announced the acquisition of Brooke Bond Real Estate, a Bangalore, India-based site that is being developed into a so-called I.T. Special Economic Zone. GIC purchased the asset through Brigade Properties, its joint venture with one of India’s leading real estate developers, Brigade Group. Like other funds, GIC sees real estate investments as a good way to profit from the growth of a newly affluent middle class in India.

However, GIC is exiting another popular sector — Australian infrastructure. The fund will reportedly sell its A$900 million ($708 million) industrial and logistics real estate portfolio, which comprises over 25 properties, later this year. Valuations in the asset class have skyrocketed over the past 12 months and GIC looks to be taking the opportunity to cash in.

Sovereign Wealth Funds in Talks Over O2 Merger

GIC is also in the lead to nab a slice of the U.K. telecom market alongside Hong Kong-based conglomerate Hutchison Whampoa, which has agreed a deal to buy U.K. telephone network O2 for £10.25 billion ($15.3 billion) and merge it with its Three network. The deal has been finalized after two months of negotiations and due diligence, although regulatory approval may take up to a year.

The deal will create the U.K.'s largest mobile telephony provider, and Hutchison Whampoa is currently in negotiations with sovereign wealth and pension funds to sell a 30 percent stake in the merged business. GIC looks to be in pole position for the stake, but the Qatar Investment Authority (QIA) and the Canada Pension Plan Investment Board are also said to be in the running.

GIC and QIA are also reported to be submitting rival bids for Milan-based luxury retail operator World Duty Free Group. The current owner, the Benetton family's holding company Edizione, has put the firm on the market for €3 billion ($3.3 billion). We learned this week that QIA is teaming up with Swiss travel retailer Dufry on the bid.

China Investment Corp. Eyes Agriculture, Mining Investments

China Investment Corp. (CIC) is reportedly ready to make new direct investments after a quiet spell. The fund is reportedly in talks over a potential $200 million investment in Moscow-based conglomerate Basic Element's agriculture arm, Kuban Agricultural Holding. CIC is reportedly eyeing farms in East Africa, too.

CIC is also increasing its exposure to the Australian mining sector. On Wednesday, Perth-based uranium miner Paladin Energy announced that CIC had subscribed to a $50 million bond issue through its subsidiary, Leader Investment Corp. CIC made several investments in mining and commodities firms in 2011 when prices dropped and now looks to be ready to move back into the sector.

Updated Fund Profiles

Our market-leading fund profile library provides unrivalled analysis of more than 90 government and sovereign funds.

Register to read fund profiles

Recent SWF Investments

Search the database of direct investments and mandates by fund, industry and target market to identify past deals that match your requirements. Access over $1 trillion worth of transactions dating back to the 1960s.

Register to explore our data

Latest SWF News

Sovereign Wealth Center makes staying abreast of the most recent government and sovereign fund events easy. Our team undertakes a thorough review of global news feeds every morning and distills salient points.

Register for the latest SWF news
Join the discussion:

To be able to print this content,
you must be a subscriber

For details on your subscription options,
please contact: