SWF Weekly News Roundup — Logistics, India and Cars

July 24, 2015 by Loch Adamson

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Logistics properties attract sovereign wealth funds. ADIA and GIC join to invest in a European car leasing firms. Temasek allocates more capital to India.

Logistics Deals

Logistics investments are proving increasingly popular among sovereign wealth funds as the boom in online shopping drives demand for delivery hubs in developed and emerging markets. On Wednesday, Norges Bank Investment Management (NBIM), the arm of the central bank that manages Norway's $870 billion sovereign wealth fund, Government Pension Fund Global, announced it bought a 50 percent stake in a portfolio of European logistics properties from San Francisco-based Prologis on May 12. NBIM paid €155 million ($174.2 million) for the stake in the portfolio, which will now form part of Prologis European Logistics Partners, an existing joint venture between NBIM and the U.S. real estate company. The portfolio comprises eight properties across the U.K., France and Poland. Prologis will manage the assets on behalf of the joint venture.

China has experienced an e-commerce boom in recent years with the rise of Internet giants such as Alibaba — and sovereign wealth funds are looking to capitalize on the trend by investing in warehouses there. This week sovereign wealth funds from Asia, the Middle East and North America contributed capital to a new China-focused infrastructure fund launched by Singapore-listed Global Logistics Properties (GLP). On Monday, GLP said the unnamed investors had contributed $3.7 billion in equity to the fund, which will focus on logistics properties in mainland China. GLP will hold a 56 percent interest in the venture and is seeking to raise up to an additional $7 billion over the next few years.

Singapore's $342 million GIC may be one of the institutions that allocated capital at the initial fund raising. GIC owns a stake in GLP and recently teamed up with the firm to buy an to acquire IndCor Properties, one of the largest industrial platforms in the U.S., for $8.1 billion from New York-based Blackstone Group.

Temasek’s Eye for India

Online shopping is a growing trend in India, too. Singapore's $194 billion Temasek Holdings reinvested $14 million in Mumbai-based e-commerce firm Just Dial this week, according to local media reports. Temasek first invested in the company at its initial public offering in 2013 but sold its stake soon afterward to cash in on the company's soaring valuation.

Temasek also agreed to create a new joint venture with Singapore-based United Overseas Bank (UOB) to provide debt financing to early-stage companies in China, India and Southeast Asia. Under the terms of the deal, Temasek will sell 50 percent of its Mumbai-based subsidiary SVB India Finance to UOB. The partners will rename SVB as Innoven Capital and restructure the firm as a joint venture. Both Temasek and UOB will commit an extra $100 million to the business over the next five years.

Temasek bought SVB, formerly a subsidiary of Santa Clara, California-based Silicon Valley Bank, for about 2.8 billion Indian rupees ($45.4 million) in January 2015.

ADIA and GIC in Car-Leasing Deal

GIC and the $621 billion Abu Dhabi Investment Authority (ADIA) are part of a consortium that agreed to buy Almere, Netherlands-based car-leasing company LeasePlan Corp. for €3.7 billion ($4 billion). The consortium, which is led by Dutch public pension fund PGGM and also includes London-based private equity firm TDR Capital and New York-based Goldman Sachs Group, negotiated the deal over a six month period with the sellers, Wolfsburg, Germany-based Volkswagen AG and Netherlands-based Fleet Investments NV, after six months of negotiations.

This is the second time that LeasePlan has attracted sovereign wealth fund interest. In 2004 Abu Dhabi's $60.9 billion Mubadala Development Co. partnered with VW and Riyadh–based Olayan Group to buy the company from Dutch bank ABN Amro. VW later bought out its two Middle Eastern partners.

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