Government Fund Weekly News Roundup: SWFs Scout New Frontiers

March 24, 2016 by SWC Editors

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In the news this week: GIC and Temasek invest in the Philippines, Thailand and Vietnam. Mubadala explores opportunities in Brazil and Russia. And the world’s largest pension fund appoints a new president.

GIC Eyes Slice of the Pie in Southeast Asia

As growth in developed markets slows, some of the more adventurous government funds are looking at opportunities to invest in niche sectors in frontier markets. Filipino pizza parlors, anyone?

This week, Singapore’s GIC teamed up with Century Pacific Group, a food conglomerate based in the Philippines, to purchase a majority stake in Manila-based International Family Food Services, which owns and operates the local franchises of two U.S.-based pizza restaurant chains: Shakey’s Pizza and Project Pie. The partners bought the stake from Filipino entrepreneurs the Prieto family for an undisclosed sum.

As GIC’s CIO Lim Chow Kiat told the Sovereign Wealth Center in a recent interview, the fund is looking at opportunities in Singapore’s "backyard" because the city-state’s neighboring economies boast a young — and increasingly affluent — consumer base. Last week, GIC invested in Masan Group, a Vietnamese conglomerate whose business model focuses on companies that stand to profit from the increased spending power of the country’s emerging middle class.

GIC’s peer Temasek Holdings is also looking to take advantage of the rise in consumer spending across the region. Innoven Capital, a joint venture between Temasek and Singaporean lender United Overseas Bank (UOB), made its first investments in Southeast Asia this week, providing a total of $5 million in debt financing to two e-commerce startups: Malaysian company KFit Holdings, whose online platform gives customers access to gyms and fitness classes, and Thai fashion retailer Pomelo Fashion. 

Mubadala Bullish on Brazil and Russia

Abu Dhabi’s Mubadala Development Co., meanwhile, is continuing to invest in the more-established emerging economies, the BRICS — even as they are beset by political and economic woes.

Mubadala has opened an office in Rio de Janeiro, ostensibly to manage the assets it has clawed back from Brazilian conglomerate EBX. In 2012, the Abu Dhabi fund paid $2 billion for a 5.6 percent stake in EBX, which is still controlled by founder and Chairman Eike Batista, but his empire started to collapse in 2013 under the dual strain of massive debt and sinking commodities prices. Since then the fund has reclaimed various assets from the conglomerate, including Rio de Janeiro-based Hotel Gloria and the Leblon Executive Tower, a commercial property in Rio’s prime business district.

Mubadala also invested in Russia this week. The fund teamed up with state-backed private equity firm the Russian Direct Investment Fund (RDIF) to finalize the purchase of two warehouses in Moscow from local logistics company PNK Group. In 2013, RDIF and Mubadala established a $2 billion joint venture to invest in Russia and the funds have been negotiating the purchase of the two logistics properties since last August. 

GPIF Appoints New President

The world’s largest pension fund, Japan’s $1.2 trillion Government Pension Investment Fund (GPIF), has named Norihiro Takahashi as its new president. The appointment of Takahashi — previously senior managing director at Tokyo-based agricultural bank Norinchukin, one of Japan's largest investors in alternative assets — will likely enhance GPIF's efforts to diversify its portfolio.

Takahashi will replace the incumbent, Takahiro Mitani, when he retires in June. Since 2012, Mitani has overseen efforts to increase GPIF’s allocation to more lucrative assets at the behest of Japan’s reformist Prime Minister Shinzo Abe. The fund has reduced its holdings of low-yielding domestic government bonds from 67 percent to 38 percent over the last four years as it seeks to improve its investment returns.

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