Sovereign Wealth Fund Weekly News Roundup — Planes, Trains and Automobiles

July 10, 2015 by Loch Adamson

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Nice airport
Nice Côte d'Azur Airport

Sovereign wealth funds continue to target transport infrastructure in developed markets, Temasek rises 19 percent and China’s stock market crash prompts purchases by CIC’s Central Huijin arm.

SWFs Target Infrastructure

Sovereign wealth funds continue to invest in developed market infrastructure assets, attracted by the stable long-term cash flows they offer. On Wednesday, Associated British Ports (ABP), a group that owns and operates 21 seaports across the U.K., confirmed that the Kuwait Investment Authority (KIA) has bought a 10 percent stake in the company. KIA, which manages around $548 billion in assets, probably bought the stake from Singapore’s $342 billion sovereign wealth fund GIC, whose own stake dropped from 33.3 percent to 23.3 percent, according to ABP’s statement.

ABP also confirmed that Goldman Sachs Infrastructure Partners and Infracapital, the London-based infrastructure equity investment arm of M&G Investments, sold their combined 33.3 percent stake to Anchorage Ports, a consortium comprising Canada Pension Plan Investment Board and Hermes Infrastructure Partners, the infrastructure arm of London-based Hermes Investment Management.

Several sovereign wealth funds are reportedly competing for a stake in Nice-based Aéroports de la Côte d’Azur, a state-owned firm that operates three airports in the south of France. The French government is planning to privatize the company later this year and three U.A.E.-based funds have reportedly expressed an interest in buying a majority stake, either individually or as part of investor groups. Aéroports de la Côte d’Azur operates Nice Côte d'Azur Airport, Cannes Mandelieu Airport and the Gulf of Saint-Tropez Airport. It also owns a network of aviation terminals that it leases to other airports across Europe. The company is worth a reported €1.5 billion ($1.6 billion).

Sovereign wealth funds also allocated capital to private equity giant KKR & Co.’s new $3.1 billion infrastructure investment fund this week. The fund will invest in roads, railways, airports and utilities in Organisation for Economic Co-operation and Development (OECD) countries. KKR did not disclose the names of the funds involved.

Temasek Assets Rise 19 Percent

Singaporean state investor Temasek Holdings published its annual report this week. The document revealed the fund’s assets rose 19 percent to S$266 billion ($193.87 billion) over the twelve months to March 31. Temasek increased its exposure to developed markets over the period — Europe and North America now account for 17 percent of its assets, up from 14 percent in 2013 — but confirmed that the strong returns from its investments in Singapore and China drove the portfolio’s performance.

China’s Stock Plunge

In a press conference to mark the publication of Temasek’s annual report, Wu Yibing, head of China operations, said he was unconcerned about the recent decline in the Chinese stocks that has wiped more than 30 percent off the value of the market over the past month. Indeed, Wu said the volatility may generate investment opportunities.

Meanwhile, the Chinese government has enlisted the help of various state-linked institutions to try and curb the sell-off. Among them: Central Huijin Investment, the domestic investment unit of the $652.7 billion China Investment Corp. Central Huijin confirmed this week that it would continue to buy Chinese exchange traded funds (ETFs) and that it would not sell any domestic-listed stocks during the current volatility.

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