Government Fund Weekly News Roundup: QIA Refines its Portfolio

March 04, 2016 by SWC Editors

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Downtown Doha

In the news this week: The Qatar Investment Authority buys and sells assets in Europe and the U.S. Officials at the Abu Dhabi Investment Authority and the U.A.E’s central bank repudiate claims that oil-based sovereign wealth funds are selling assets en masse. And government funds in Oman and Singapore plan health care investments.

Qatar Buys Real Estate, Sells Film Company

It’s been a busy week for the Qatar Investment Authority (QIA). The sovereign wealth fund has made some major adjustments to its investment portfolio, adding real estate assets and offloading its high-profile stake in film studio Miramax.

QIA teamed up with Santa Monica, California-based real estate investment trust Douglas Emmett to acquire a portfolio of four office buildings in Los Angeles for $1.3 billion. The partners obtained a $550 million loan to help finance the transaction. QIA has been targeting more real estate investments in the U.S. since it opened an office in New York in September 2015.

But the Qatari fund is still keen on European investments, which comprise the bulk of its portfolio. QIA is reportedly planning to increase its shareholding in Barcelona-based real estate group Inmobiliaria Colonial, for example. QIA currently owns 13 percent of the share capital in the real estate company and is negotiations to ramp up its stake to 30 percent — which would make it Inmobiliaria’s biggest shareholder.

QIA also completed a major divestment this week, selling its 75 percent stake in Santa Monica-based Miramax to Doha-based BeIN Media Group. The Qatari broadcaster also bought the 25 percent held by QIA’s co-owner, Colony Capital, a Los Angeles-based private equity firm, to take complete control of Miramax.

BeIN has not disclosed the price it paid, but press reports suggest QIA and Colony were hoping to sell the company for approximately $1 billion. Demand for the company’s film library has grown in recent years with the rise of online streaming services, and BeIN was keen to gain access to Miramax’s portfolio of 700 movies, which includes such titles as Quentin Tarantino’s Pulp Fiction. What’s the Arabic for "Royale with cheese?"

U.A.E. Officials: SWF Sell-Off Fears "Overblown"

Since the turn of the year, alarmist media reports have suggested commodity-based sovereign wealth funds are engaged in a mass sell-off of assets — and roiling global stock markets in the process.

Speaking at a conference in Abu Dhabi, Khalifa al-Kindi, chairman of the United Arab Emirates' central bank, and Jean-Paul Villain, head of strategy for the Abu Dhabi Investment Authority, claimed that the recent coverage of sovereign wealth funds has been overblown. Al-Kindi reminded attendees that the emirate had been exposed to low oil prices in the '80s and early '90s; Villain suggested that sovereign wealth funds actually ought to be investing counter-cyclically. "If you are a long-term investor and have long-term strategy, if you see prices falling you should buy," he said. "And if an asset class is rising you should probably reduce your exposure."  QIA’s investment activity this week would seem to illustrate Villain’s point — sovereign wealth funds are not necessarily selling assets en masse, but are perhaps becoming more discerning in their capital allocations.

Healthcare Investments

Reports in the Indian press on Wednesday indicated that Singaporean state investor Temasek Holdings is interested in buying a stake in the Kerala Institute of Medical Sciences (KIMS), which runs a chain of hospitals across India and the Middle East.

Two private equity firms — Bangalore-based Ascent Capital and New York-based OrbiMed Advisors — are selling their combined 40 percent stake in the business, and KIMS may offer an additional 20 percent stake by issuing new shares. Combined, the 60 percent stake could be worth approximately 20.5 billion rupees ($303 million). Temasek will face competition from private equity giants including New York-based Blackstone Group and Fort Worth, Texas-based TPG.

Meanwhile, the Oman Investment Fund (OIF) has reportedly signed a memorandum of understanding with U.K.-based infrastructure developer Carillion to finance the construction of a chain of hospitals across the sultanate.

Since the Arab Spring in 2011, OIF has focused on domestic development projects, boosting the local healthcare, mining, and tourism sectors, among others. The fund is currently working with the Ministry of Health and the Higher Council for Planning of Oman to develop a project called Medical City in the coastal city of Barka, in the north of the country, which will comprise specialist hospitals and a research center.

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