Sovereign Wealth Fund Weekly News Roundup — SWFs Circle Hard Assets

August 07, 2015 by Loch Adamson

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Germany Autobahn

In the news this week: ADIA sealed a multi-billion dollar deal for a German service-station group and several funds agreed to buy shares in a New Zealand power company. Meanwhile GIC, QIA and Norway’s GPFG reshuffled their real estate portfolios.

ADIA’s Autobahn Deal

Sovereign wealth funds continue to spend big on hard assets in developed markets, attracted by their stable long-term cash flows. This week the $621 billion Abu Dhabi Investment Authority (ADIA) was named as a participant in a consortium that bought Bonn-based motorway station group Autobahn Tank & Rast for a reported €3.5 billion ($3.8 billion). Tank & Rast owns and operates 350 gas stations, 390 service stations and 50 hotels along Germany’s motorway network.

Münich-based Allianz Capital Partners, the alternative investment unit of insurance group Allianz, led the consortium. ADIA participated through its subsidiary Infinity Investments. Toronto-based Borealis, the infrastructure unit of the Ontario Municipal Employees Retirement System, and German insurer Münich Re were also members of the investor group. The sellers: British private equity firm Terra Firma Capital Partners and RREEF Property Trust, the real estate investment arm of financial services giant Deutsche Bank. Terra Firma bought Tank & Rast in 2004 for €1.1 billion (then $1.4 billion) and three years later sold half of the company to RREEF.

NZ Energy Assets

ADIA has shown interest in both transport and energy infrastructure in recent months — it is reportedly part of a consortium that has submitted a bid for electricity assets in New South Wales, Australia. And ADIA may be one of the unnamed state investors that agreed to buy a stake in Wellington, New Zealand-based power generation company Contact Energy this week. According to reports in the local press, ten sovereign funds from Australia, Asia and the Middle East bought shares in Contact from Sydney-based Origin Energy, which is selling its entire NZ$1.8 billion ($1.2 billion) stake in the company.

GIC Sells Property

Sovereign wealth funds are actively managing their real estate portfolios to take advantage of soaring valuations in some markets. This week Singapore-based Pacifica Partners, a joint venture between the city-state's $342 billion sovereign wealth fund GIC and U.S.-based hospitality group Host Hotels & Resorts, sold the Four Points by Sheraton hotel in Perth. Singapore-based real estate investment firm Bonvests Holdings acquired the five-star hotel for A$91.5 million ($66.7 million), according to a statement posted on the Singapore Exchange.

GIC has offloaded several Australian properties over the past 12 months as it seeks to cash in on rising prices. In May 2015, for instance, the fund sold the Westin Sydney hotel to a joint venture between Singaporean developer Far East Land and Hong Kong-listed Sino Land Co. for A$445.3 million.

GIC is also withdrawing from real estate funds. The fund reportedly hired Dallas-based Greenhill Cogent, an advisory firm specializing in the secondary market for alternative assets, to sell a $1 billion portfolio of real estate fund investments.

QIA and GPFG’s London Real Estate Deals

The $302 billion Qatar Investment Authority (QIA), too, has been reshuffling its real estate portfolio. The Qatari fund agreed to sell two office buildings in London’s South Bank district to Luxembourg-based property developer Almacantar for £550 million ($857 million). QIA owns the buildings through a joint venture between Qatari Diar Real Estate Investment Co., the fund's property-development subsidiary, and Canary Wharf Group, a holding company co-owned by QIA and Canadian real estate investor Brookfield Property Partners. Qatari Diar and Canary Wharf Group bought the buildings in July 2011 for £300 million.

As Qatar sells out, Norway is buying in. Norges Bank Investment Management (NBIM), the arm of the central bank that oversees Norway’s $870 billion Government Pension Fund Global, is reportedly close to acquiring a London shopping center for £240 million. According to the British media, NBIM will buy the mall located above Bond Street underground rail station from London-based real estate firm Orchard Street Investment Management. The site comprises retail space and office accommodation.

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