Sovereign Wealth Fund Weekly News Roundup: ADIA Finally Rewarded in Its Luxury Hotels Hunt

May 01, 2015 by Loch Adamson

Sovereign Wealth Fund News #Roundup: #ADIA in #Luxury #Hotel #Investment
Sovereign Wealth Fund News #Roundup: #GIC and #Temasek into #Telecom
Sovereign Wealth Fund News #Roundup: #Oman in #Spain #Deal
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In the news this week: the Abu Dhabi Investment Authority in $1.3 billion luxury hotel deal in Hong Kong. Elsewhere, Oman’s SGRF plunges into Spain and more sovereign wealth fund investments and divestments.

The Abu Dhabi Investment Authority (ADIA) has paid HK$10 billion ($1.3 billion) to Hong Kong–based hospitality company New World Development to own three of the territory’s prime hotels valued at HK$18.5 billion ($2.4 billion). The joint venture will own the Grand Hyatt Hong Kong, Renaissance Harbour View and Hyatt Regency TST paid at an average of $1.35 million per room — a record for the Asia-Pacific region. ADIA had recently lost out on a portfolio of London hotels including Claridge’s, The Connaught and The Berkeley to the Qatar Investment Authority.

The Abu Dhabi fund also made headlines for its pending litigation with the Norwegian government over a possible reduction of the revenue stream of Gassled, Norway's undersea pipe network. The investors, which also include the Canada Pension Plan Investment Board, and Allianz Capital Partners acquired a 24.1 percent stake in Gassled from Norway’s Statoil for $3 billion in 2011. The Norwegian government, which owns 45.8 percent of the network, had announced in 2013 a 90 percent reduction of gas pipeline tariffs from 2016, which will have major effect on on the consortium’s original investment thesis.

Singapore’s state investors calling

Singapore’s GIC and Temasek Holdings are closing in on telecommunications investments in the U.K. and Indonesia, respectively. GIC, in conjunction with the Canada Pension Plan Investment Board (CPPIB) has reportedly beat out competition from the China Investment Corp. and the Qatar Investment Authority to buy a £1 billion ($1.5 billion) stake in the new holding company created by the merger of U.K. telephone network O2 with telecoms group Three, part of Hong Kong-based conglomerate Hutchison Whampoa. Whereas Temasek, which has recently been looking to cash in on Indonesia’s rapid economic growth, is rumored to be backing a secondary share issue of Jakarta-listed telecom-tower operator Solusi Tunas Pratama (STP).

OMAN’s SWF Spanish Trip and Bulgarian Troubles

The State General Reserve Fund of the Sultanate of Oman (SGRF) is setting up a €200 million ($220 million) joint venture to invest in Spanish companies in partnership with Madrid-based Compañía Española de Financiación del Desarollo, a state-backed private equity firm. The joint venture will invest in Spanish companies active in the construction, energy, food, and tourism sectors that want to expand their international footprint in Oman, the wider Gulf region, East Africa and Southeast Asia.

The Omani fund is also seeking damages of €700 million ($785 million) against the Bulgarian state institutions over their treatment of Sofia–based Corporate Commercial Bank, in which SGRF holds a 30 percent stake. The lender was declared insolvent last week, starting on November 6, 2014, when it lost its banking licence. Bulgaria's central bank took over the management of CorpBank on June 20, 2014 following a run on the bank after its leadership was accused of operating a Ponzi scheme.

SWF Divestments

Two sovereign funds were involved in divestments this week. The Abu Dhabi Investment Council, has again cut its stake in Toronto-based Hudson's Bay Co., which runs a chain of department stores in Canada and the U.S. The Council sold a 5.8 percent stake for a total of $288.5 million, reducing its shareholding in the company to 14.8 percent after the sale. The Council originally bought a 49 percent stake in the company in 2009 when it co-invested $500 million alongside New York-based NRDC Equity Partners, and it has been gradually selling its holding over the past two years.

Khazanah Nasional, Malaysia's sovereign wealth fund, has also reportedly sold half of its stake in one of its portfolio companies. Khazanah sold 1.3 billion Indian rupees ($20 million) worth of shares in Mumbai-based financial services firm L&T Finance Holdings, a subsidiary of Indian conglomerate Larsen & Toubro. Khazanah originally bought a 2.2 percent stake in L&T for around INR 2.1 billion at the company’s initial public offering in 2011 and has now diminished its stake to just over 1 percent, according to local media reports.

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