Government Fund Weekly News Roundup — Co-Investments and Partnerships

December 18, 2015 by Loch Adamson

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Xi Mubadala

Chinese President Xi Jinping and Abu Dhabi Crown Prince Sheikh Mohammed Bin Zayed Al-Nahyan witness the signing of an agreement between Mubadala Development Co. and Chinese partners.

This week: Abu Dhabi’s Mubadala Development Co. signs co-investment agreements with Chinese firms during Xi Jinping’s state visit to the U.A.E. The Abu Dhabi Investment Authority and Canada’s CPPIB invest in logistics properties. And government funds’ interest in India continues.

Chinese Co-Investments

When Chinese President Xi Jinping is in town on a state visit, you can usually expect lots of pomp and grandeur — and a raft of trade and investment agreements. After Xi’s visit to London in October, for example, the U.K. and Chinese governments signed business deals worth £25 billion ($38 billion).

Xi’s visit to the U.A.E. this week also prompted a flurry of deal—making. Xi met Abu Dhabi Crown Prince Sheikh Mohammed Bin Zayed Al-Nahyan to discuss economic cooperation between China and the U.A.E. — and government funds took advantage of the opportunity to sign off on multi—billion dollar co-investment agreements.

During Xi’s visit, China’s $600 billion State Administration of Foreign Exchange (SAFE) and Abu Dhabi’s $66 billion Mubadala Development Co. announced they will work together on a new $10 billion global investment fund, alongside Beijing-based China Development Bank Capital. The partnership will target alternative asset-management strategies and special opportunities such as greenfield investment projects.

Mubadala also signed a separate cooperation agreement with state-owned energy firm China National Petroleum Corp. in Abu Dhabi this week. The two companies agreed to collaborate on new and existing onshore and offshore projects to locate and develop oil and liquefied natural gas (LNG) reserves outside of the U.A.E.

ADIA and PSP Buy Logistics Portfolio

The $621 billion Abu Dhabi Investment Authority  (ADIA)  also teamed up with one of its peers this week. ADIA and Canada's $85 billion Public Sector Pension Investment Board (better known as PSP Investments) purchased a $3.15 billion industrial property portfolio from Philadelphia-based real estate investment manager Exeter Property Group. The deal fits a recent trend: Shifts in consumer dynamics, such as the boom in online shopping, have driven sovereign and government funds toward logistics properties as they search for potential earnings growth.

Indian Investments

PSP’s Canadian peer, the $215 billion Canada Pension Plan Investment Board (CPPIB), was active in India this week. The fund increased its stake in India's L&T Infrastructure Development Projects, a unit of Mumbai-based conglomerate Larsen & Toubro. CPPIB paid 10 billion rupees ($149.5 million) for newly-issued shares in the company on December 15. The fund committed the same amount at the company's previous capital-raising exercise in 2014.

Singapore’s $194 billion Temasek Holdings, a seasoned investor in India, is reportedly prepared to pay 18 billion rupees for a 72 percent stake in Hyderabad-based healthcare company Care Hospitals. Temasek had formed a consortium with U.S. private equity powerhouse TPG to jointly acquire the stake, but decided to press ahead with the deal on its own when TPG pulled out.

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