These deals follow one of the biggest fund-raising
exercises of last year, when several sovereign wealth funds
contributed to Singapore-listed developer Global Logistics
Properties’
$7 billion China-focused infrastructure
fund in July 2015. Such investments suggest government
funds are confident China will make the transition to a more
consumer-driven economic model, in which sectors such as
e-commerce become key drivers of economic growth —
and are positioning themselves to benefit from the shift. Sun
Tzu would have approved.
Indian Infrastructure
Government funds also appear to be bullish on the
prospects another BRIC economy: India. According to reports
in the Indian press this week, several sovereign wealth funds
are reportedly set to acquire stakes in the Indian
government's newly-established National Investment and
Infrastructure Fund (NIIF), which will focus on investments
in the country’s energy and transport
networks.
The funds discussing whether to invest in the NIIF include
ADIA, the $334 billion
Qatar Investment Authority, Singapore's
$343 billion
GIC and its national peer
Temasek Holdings, which oversees $194
billion in assets. The Indian government has allocated 200
billion rupees ($2.9 billion) in start-up capital to NIIF and
is seeking to raise the same amount from foreign partners.
The government will offer the sovereign wealth funds seats on
the NIIF's governing council to enable them to steer its
investment strategy.
In Mumbai, a special-purpose vehicle (SPV) jointly owned by
QIA and Bangalore-based developer RMZ Group is reportedly set
to buy the Equinox Business Park for INR 24 billion from
Indian conglomerate Essar Group. QIA and RMZ established the
SPV, which specializes in Indian commercial real estate, in
July 2013, when the partners each contributed $300 million in
equity. QIA provided a further $160 million to the vehicle in
April 2015.
SWFs Reshuffle Russian Portfolios
Less consensus exists among government funds when it comes to
investments in a third of the BRICs: Russia. ADIA, for one,
seems optimistic about the country’s economic
prospects. This week the Abu Dhabi fund reportedly agreed to
buy a shopping center in St. Petersburg from
Moscow-based real estate developer HALS-Development for
approximately 10 billion rubles ($125.8 million). ADIA beat
competition from a consortium comprising the
Russian Direct Investment Fund, a $10
billion state-backed private equity firm, and the $65.8
billion sovereign wealth fund Mubadala Development Co.
In contrast, the
China Investment Corp. (CIC) sold one of
the few Russian assets in its portfolio this week. CIC
offloaded its 5 percent stake in the Moscow Exchange,
Russia's largest stock exchange, which it had bought for
approximately $50 million CIC in 2013 in a deal facilitated
by RDIF.