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
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
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
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,
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.