Sovereign Wealth Fund Weekly News Roundup — SWFs Target Infrastructure Investments

August 21, 2015 by Loch Adamson

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Middle Eastern sovereign wealth funds continued to buy European infrastructure assets this week, while Singapore’s GIC and Temasek closed big buyout deals in China and Australia.

Planes, Trains and SWFs

Sovereign wealth funds’ appetite for European transport infrastructure continues — despite high valuations and fierce competition.

The $621 billion Abu Dhabi Investment Authority (ADIA), which was part of a consortium that bought German motorway service station operator Autobahn Tank & Rast for a reported €3.5 billion ($3.8 billion) earlier this month, turned its attention to British trains this week. ADIA teamed up with Sydney-based investment manager AMP Capital, Danish pension fund PensionDanmark and Zurich-based Swiss Life Asset Managers to buy a 43.4 percent stake in British train-leasing company Angel Trains.

The $592 billion Kuwait Investment Authority (KIA) is also eyeing British transport assets. Wren House Infrastructure Management, KIA’s infrastructure unit, is reportedly part of a consortium that is preparing a £2 billion ($3 billion) offer for London City Airport, which business travellers use to access the British capital's financial districts. According to sources in the U.K. press, KIA is teaming up with Ontario Teachers’ Pension Plan and Hermes Infrastructure Management, the infrastructure unit of London-based fund manager Hermes, in a bid for the airport asset. The sellers are New York-based private equity firm Global Infrastructure Partners and Los Angeles-based distressed-debt specialist OakTree Capital Management.

KIA is following another infrastructure asset with interest as it reportedly placed a bid to buy a 15 percent stake in Rome airport operator Aeroporti di Roma (ADR) this week — but it will need to see off rival bids from other sovereign funds. China’s $600 billion State Administration of Foreign Exchange (SAFE) and Toronto-based Borealis, the infrastructure division of the Ontario Municipal Employees Retirement System, are believed to be the frontrunners to buy the asset from Milan-based infrastructure investment firm Atlantia. 

GIC’s Deal Down Under

It’s not just European infrastructure that is attracting sovereign wealth funds’ attention. Singapore’s $342 billion GIC was part of a buyout group that acquired Australian infrastructure and logistics firm Asciano for A$8.9 billion ($6.6 billion) this week.

Brookfield Infrastructure, a unit of Toronto-based investor Brookfield Asset Management, led the consortium and will now own approximately 76 percent of Asciano. GIC and the British Columbia Investment Management Corp., which manages around $94 billion in assets for public sector clients in the Canadian province, will each own 11 percent of the company after the completion of the deal, which is still subject to regulatory approval.

A Busy Week for Temasek

GIC’s peer Temasek Holdings agreed its own big buyout deal this week. Singapore’s $194 billion state investor was part of a consortium of Chinese insurance and private equity firms that acquired Shanghai-based, New York-listed pharmaceutical technology firm Wuxi PharmaTech for $3.3 billion. The partners paid $46 per depositary share in the company, which will cease trading on the New York Stock Exchange after the deal is completed.

Temasek also allocated yet more capital to India, increasing its stake in Delhi-based Jasper Infotech, which runs the online marketplace Temasek participated in the firm’s latest fundraising round alongside Chinese Internet giant Alibaba Group and Taiwanese electronics conglomerate Foxconn Technology Group. The round raised $500 million, valuing Snapdeal at around $4.7 billion.

But Temasek is continuing to target developed markets, too. A joint venture between Temasek and Oxford Properties, the real estate investment arm of the Ontario Municipal Employees Retirement System, is reportedly close to buying the Blue Fin building in London's South Bank district, which houses the U.K. headquarters of U.S. magazine publisher Time Inc., for £465 million.

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