SWF Weekly News Roundup: Hospitality and Hospital Deals in Spotlight
May 29, 2015
by Loch Adamson
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In the news this week, ADIA and QIA continue their hunt
for luxury hotels while GIC makes a big investment in
Brazil.
Hotels — ADIA Checks In, GIC Out
Sovereign wealth funds’ appetite for luxury hotels
continues. This week the $589 billion Abu Dhabi Investment Authority (ADIA)
bought two hotels in Raleigh, North Carolina from local
developers Concord Hospitality Enterprises and Kane Realty.
ADIA paid approximately $80 million for the Renaissance Raleigh
North Hills and $23 million for the Hyatt House Raleigh North
Hills.
ADIA is also reportedly ready to compete with the $304.4
billion Qatar Investment Authority (QIA) for the
storied Grosvenor House hotel in London. Indian conglomerate
Sahara bought Grosvenor House in 2010 for £470 million
($732.5 million) but lost control of the property to the Bank
of China earlier this year after defaulting on its debts. ADIA
and QIA are reported to have made rival offers of between
£600 and £625 million for the hotel, which is
currently leased by Bethesda, Maryland-based Marriott
International.
This isn’t the first time the two funds have
competed for a landmark London hotel. Both submitted bids for
the Maybourne Hotels Group, which controls three of the British
capital's most recognizable properties —
Claridge’s, the Berkeley and the Connaught
— before QIA sealed a deal worth over £1.5
billion for Maybourne last month.
Not every fund is joining the the luxury hotel hunt. GIC, Singapore’s $314 billion
sovereign wealth fund, is selling out of the hotel sector as it
seeks to book big profits on sky-high valuations. This week the
fund offloaded the Westin Sydney hotel to a joint venture
between Singaporean developer Far East Land and the Hong
Kong-listed Sino Land Company for A$445.3 million ($347.5
million). GIC had bought the hotel in 2002 for A$160
million.
GIC Buys Brazilian Health Care
GIC made two big investments in health care this week.
Filings with the Brazilian Securities, Commodities and
Futures Exchange show the fund bought an undisclosed stake in
Brazilian hospital operator Rede D'Or São Luiz for
around 3.2 billion reals ($1 billion). GIC appears to have
moved to take advantage of the government’s
recent decision to allow foreign investment in the
nation’s health care sector for the first time.
Still, the investment comes as a surprise, given that
GIC’s recent approach to health
care investments led many to believe it was deemphasizing
hard assets such as hospitals in favor of consumer-oriented
businesses and research-intensive biotech.
More typical is GIC’s apparent interest in Chinese
pharmaceutical company 3SBio Inc., which makes drugs that are
used to treat blood disorders. GIC will reportedly provide $30
million to the firm as a cornerstone investor at its initial
public offering (IPO) on the Hong Kong Stock Exchange. 3SBio,
which is owned by Beijing-based Citic Private Equity Funds
Management, the venture capital arm of Chinese state-owned
conglomerate Citic Group Corp., is aiming to raise around $712
million at the IPO.
Two Funds Publish 2014 Financials
It’s the start of annual report season for
sovereign wealth funds, and this week saw two state investors
publish their financial results. Bahrain Mumtalakat Holding Co., the island
kingdom's sovereign wealth fund, disclosed revenues of 1.2
billion Bahraini dirhams ($3.18 billion) over 2014, up 11
percent from the BD 1.1 billion figure recorded for 2013. Its
overall assets reached BD 4.2 billion ($11.1 billion) as of
December 31, 2014. Profits were also up 65 percent —
or BD 181.1 million, compared with BD 109.4 million over
2013.
The Bank of Botswana, meanwhile, published its 2014 report,
which contains some information on the Pula Fund, the sovereign wealth vehicle
that it manages. The report shows the fund's assets increased
to 54.75 billion Botswanan pula, up from BWP 49.33 billion the
previous year; in dollar terms the fund's value rose slightly
to $5.76 billion from $5.65 billion. The Bank of Botswana does
not appear to have changed the fund's portfolio composition
over the period — bonds and equity comprise 55 percent
and 43 percent of the portfolio respectively, with the balance
in other assets, as they did at end-2013.
The report also provides details on the Botswanan government's
plans to introduce a so-called fiscal rule requiring it to save
40 percent of revenues from the country's diamond exports in a
fund for future generations, although it is not clear whether
this new savings plan will involve the Pula Fund or an entirely
new vehicle.
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