Sovereign Wealth Fund Weekly News Roundup: SWFs Continue Betting on Infrastructure

June 05, 2015 by Loch Adamson

Sovereign Wealth Fund News #Roundup: #AbuDhabi sovereign fund in #Infrastructure #Australia
Sovereign Wealth Fund News #Roundup: #Singapore sovereign fund GIC buys more #Logistics
Sovereign Wealth Fund News #Roundup: #Kuwait sovereign fund in #UK #Train Bid #infrastructure
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Sydney Harbour Bridge

"Sydney Harbour Bridge from Circular Quay" by JJ Harrison - Licensed under CC BY-SA 3.0 via Wikimedia Commons 

In the news this week: ADIA, GIC and KIA have all been slaking their thirst for constant revenue streams and predictable cash flows, by showing more interest in global infrastructure assets. The funds placed bids for Australian toll roads, British train operators and U.S. logistics facilities. 

ADIA Bids for Australian Motorway, Again

As Sovereign Wealth Center reported in April, Australia’s long-term demographic trends make its infrastructure attractive to long-term institutional investors. As competition —  and prices — heat up, state-owned investors are using the knowledge and contacts of local investment firms and infrastructure specialists to source deals. This week the Abu Dhabi Investment Authority (ADIA) teamed up with Melbourne-based toll-road operator Transurban Group and pension fund AustraliaSuper — its partners in the purchase of Queensland Motorways last year — for another toll-road bid. The consortium is reportedly bidding A$1.3 billion ($1 billion) for BrisConnections, which operates Brisbane's toll road AirportlinkM7. 

Kuwait's London Infrastructure Unit Eyes British Train Lessor

While ADIA bets on Australian long-term growth, the Kuwait Investment Authority (KIA), through its London-based Wren House Infrastructure Management subsidiary, is bidding for one of the oldest European privatized transportation networks. KIA is looking into the books of British train leasing company Angel Trains, one of three British train lessors, along with Eversholt Rail and Porterbrook Leasing Co., created by the U.K. government following the privatization of British Rail in the early 1990s. London-based infrastructure fund manager Arcus Infrastructure Partners, the current majority shareholder of Angel, has put the company up for sale and already received bids from an investor group comprised of ADIA and Sydney-based investment manager AMP Capital, which as a 25 percent holder of Angel has preemptive rights on the company.

GIC Fuels XPO’s Growth

Singapore’s GIC and two big Canadian pension funds — Ontario Teachers' Pension Plan Board and PSP Investments — are leading a new $1.26 billion capital raising by Greenwich, Connecticut-based XPO Logistics, a third-party service provider of transport logistics. The three investors originally committed a total of $700 million in September 2014, and GIC increased its stake in December to over 10.5 percent. In this new capital raising, XPO tapped a total of 15 institutional investors, including other sovereign wealth funds and university endowments. The equity injection, together with a separate $2 billion debt issue, will help XPO to fund its pending purchase of Lyon, France-based logistics provider Norbert Dentressangle and other acquisitions. XPO, the third largest North American freight brokerage firm, is pursuing an aggressive expansion strategy. In this capital raising, it sold 28 million new ordinary shares and preferred stock to the investors at a price of $45 per share of common stock, or its equivalent in the case of the preferred. The stock issue represents approximately 21 percent of XPO’s fully-diluted common stock.

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