Government Fund Weekly News Roundup — As Shares Plunge, QIA Reshuffles Portfolio

October 09, 2015 by Loch Adamson

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After a difficult month, Qatar Investment Authority prepares to reshuffle its portfolio. Temasek Holdings and China Investment Corp. agree to make new commitments to private equity funds. London attracts yet more SWF capital.

QIA Eyes Glencore Assets, Sells Vinci Stake

It’s been a turbulent few weeks for the $334 billion Qatar Investment Authority (QIA). The fund’s portfolio has been hit by plunging share prices in two firms in which it owns big stakes: Swiss conglomerate Glencore, which is struggling amid falling commodities prices, and German car maker Volkswagen, which is at the center of a scandal focused on emissions-testing falsification in the U.S.

Ever the active investor, QIA is taking steps to reshuffle its portfolio as its stock holdings shed billions in value. The fund is reportedly interested in buying a minority stake in Glencore's agriculture business, which the firm is selling to raise capital and reduce its debts. Singapore’s $343 billion GIC and the Canada Pension Plan Investment Board are also vying for the shares.

QIA is also preparing to sell its 1.1 percent stake in Paris-based construction giant Vinci for approximately €380 million ($426 million), according to reports in the French media. QIA's subsidiary Qatari Diar acquired a 5 percent stake in Vinci in 2010 and has partnered with the firm on several infrastructure joint ventures in Qatar. After the sale, QIA will still own 3.9 percent of Vinci.

Private Equity

Singapore's $194 billion state investor Temasek Holdings is backing its venture capital firm, Vertex Venture Holdings, with $600 million in a bid to expand its global operations. Since its inception in 1988, Vertex has supported more than 350 start-ups, mainly in the Pacific Rim, but it will now look further afield for opportunities. Vertex's CEO Chua Kee Lock has identified healthcare as a sector of particular interest.

The $746 billion China Investment Corp. is reportedly a limited partner in the inaugural fund raised by Munich-based private equity firm Asia-Germany Industrial Promotion Capital. Henry Cai, the main promoter of the fund and a former banker with Deutsche Bank China, said the firm raised $550 million in its first fund closing, which it will use to invest in small- and medium-sized German industrial companies that want to build their presence in China.

London Calling

London has attracted billions in investment from government funds over the past few years — and the torrent of cash flowing into the U.K. capital shows no sign of abating.

New York-based private equity firm Global Infrastructure Partners and Los Angeles-based distressed-debt specialist OakTree Capital have invited bids of approximately £2 billion for London's City Airport, which business travellers use to access the British capital's financial districts. Gingko Tree Investments, the real estate and infrastructure arm of China's $600 billion State Administration of Foreign Exchange (SAFE), is reportedly joining forces with Australian infrastructure giant Macquarie Group to submit an offer. A rival bid is expected from a consortium including the $592 billion Kuwait Investment Authority, the $117 billion Ontario Teachers’ Pension Plan and Hermes Infrastructure Management, the infrastructure unit of London-based fund manager Hermes.

Norges Bank Investment Management (NBIM), the arm of the central bank that manages Norway’s $830 billion Government Pension Fund Global, announced this week that it had bought the top two floors of Queensberry House at 33 Savile Row, the building that also houses its London office. NBIM now owns the entire £235 million ($355 million) property, which comprises a mixture of residential and office space.

Annual Reports

Two more funds have published their annual reports. The New Zealand Superannuation Fund disclosed a return on investment of 14.64 percent over the 2014-’5 fiscal year, which ended on June 30, bringing its overall assets to NZ$29.54 billion ($20 billion). NZ Super separately published more recent performance figures that revealed its investment portfolio lost 4.3 percent in August. The fund’s assets stood at NZ$28.79 billion as of August 31.

The Fondo Soberano de Angola (FSDEA) announced that it managed $4.88 billion as of December 31, 2014. FSDEA currently holds most of its portfolio (56 percent) in fixed-income instruments but wants to build its allocation to alternative assets, including private equity, real estate and infrastructure.

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