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Government Fund Weekly News Roundup: SWFs Target Indian Real Estate, Finance and Tech
March 18, 2016
by SWC Editors
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Construction in Mumbai
In the news this week: Sovereign wealth funds continue
to invest in India across a range of industry sectors.
Government funds finally close on a deal for Australian
infrastructure company Asciano. And Italy and Iran discuss a
joint venture.
Indian Investments
Have the BRICS hit the wall? Brazilian President Dilma
Rousseff’s administration is dealing with a
corruption scandal — and the country’s
worst recession in 25 years. Russia continues to reel from the
one-two punch of Western economic sanctions and low oil prices.
Concerns are growing over the size of China’s
public debt. And in South Africa, the rand has plunged amid
fears over the stability of President Jacob Zuma’s
government.
The exception is India, which looks a picture of good health in
comparison. Since taking office in 2014, President Narendra
Modi has presided over a period of strong economic growth
— according to figures from India’s
Ministry of Finance, Indian GDP will rise between 7 percent and
7.5 percent over the coming fiscal year — thanks in
part to surging inward investment. Government funds are among
the foreign institutions buying Indian assets, attracted by the
country’s political stability and robust economic
fundamentals.
Temasek Holdings, for example, continues
to add to its portfolio of investments in Indian technology
companies. Singapore's state investor has reportedly bought a 5
percent stake in Indian technology startup BillDesk for $30
million, investing alongside New York-based private equity firm
General Atlantic, which paid $120 million for 20 percent of the
company. The sellers were two U.S.-based venture capital firms:
ClearStone Venture Partners and TA Associates. BillDesk
develops software that enables clients to process online
payments.
Meanwhile, the Canada Pension Plan Investment Board
(CPPIB) has signed an agreement with Mumbai-based Kotak
Mahindra Bank to invest in distressed assets across India.
CPPIB and Kotak will together invest up to $525 million in the
sector, with the Canadian fund contributing $450 million of
that amount. The partners plan to provide financing to
struggling companies and to invest in distressed-asset sales by
banks.
The Abu Dhabi Investment Authority prefers to
target large-scale real estate and infrastructure investments
in India. This week, Hines India Real Estate, the Emirati
fund’s $250 million joint venture with the Indian
unit of American property developer Hines, provided local
developer Conscient Infrastructure with $60 million to build a
new premium housing complex in the city of Gurgaon, a growing
financial and industrial hub.
Asciano Deal
Government funds have long been vying for Sydney-based railway
and seaport operator Asciano. But after seven months —
and more dramatic twists than an episode of Neighbours
— a deal for the Australian company is finally nearing
completion.
Toronto-based infrastructure group Brookfield Asset Management
and Sydney-based logistics company Qube Holdings had been
battling for the company as the leaders of separate investor
groups. But in early March, the two parties resolved to end
their rivalry and join forces.
This week, the two firms and their respective deal partners
— which include several government funds —
submitted a joint offer for Asciano that values the company at
A$12 billion ($8.9 billion). Under the terms of the proposal,
Asciano's rail and seaport operations would be divvied up among
the members of the two consortiums, which include CPPIB, China Investment Corp.,
Singapore’s GIC and the Qatar Investment
Authority. Asciano’s board recommended
the offer to shareholders on March 15, and the deal could be
completed by June.
Italy and Iran Mull Joint Venture
Italy’s Fondo Strategico Italiano (FSI) and the National Development Fund of Iran (NDFI)
are reportedly set to establish a new joint investment fund
worth $2 billion.
FSI's CEO Maurizio Tamagnini led a delegation to Iran this week
and discussed the project with Safdar Hosseini, chairman of
NDFI. Tamagnini told reporters that the plans for the joint
fund may be finalized during Italian Prime Minister Matteo
Renzi's upcoming visit to Tehran.
FSI has already formed several joint ventures with other
state-owned institutions, while NDFI is planning to become more
active in its investments following the lifting of Western
economic sanctions on Iran in January.
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