Government Fund Weekly News Roundup — SWFs Invest in Luxury Properties

May 06, 2016 by SWC Editors

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The Bay of Kotor in Montenegro. Photo: Amira_a

In the news this week: Qatar Investment Authority and Investment Corp. of Dubai snap up luxury real estate developments. Temasek Holdings continues to invest heavily in technology firms. And the Abu Dhabi Investment Authority and Norway’s Government Pension Fund Global participate in a financing round for an Indian dairy company.

Hotels and Resorts

The rugged coastline of Montenegro is renowned for its limestone peaks, fjord-like bays and spectacular views over the Adriatic Sea. Luxury real estate developments are springing up along the Montenegrin coast, attracting affluent travellers to the region — along with sovereign wealth funds keen to take advantage of new investment opportunities.

This week, Investment Corp. of Dubai (ICD), the emirate's state-owned holding company, reportedly agreed a deal to acquire Porto Montenegro, a marina complex in the Bay of Kotor in the south of the Balkan state. The current majority owner of the development, Canadian billionaire Peter Munk, is prepared to sell his 51 percent stake to ICD for €200 million ($229.5 million). Porto Montenegro contains 650 yacht berths, along with hotels and apartments, and is located close to Plavi Horizonti, a resort that Qatari Diar, the real estate unit of the Qatar Investment Authority (QIA), is building on the same stretch of coast.

QIA, meanwhile, is in talks to add to its portfolio of U.S. real estate assets. The fund is negotiating with U.S. hospitality company Starwood Hotels & Resorts Worldwide over the purchase of two St. Regis-branded hotels, according to Bloomberg. QIA is reportedly prepared to pay up to $1 billion for the properties, which are located in New York City and San Francisco.

QIA’s interest in these five-star hotels indicates that the sovereign wealth fund is still willing to invest in so-called trophy real estate assets, despite becoming more discerning in its capital allocations since the collapse in oil prices in mid-2014. QIA is not alone. According to the Sovereign Wealth Center’s forthcoming 2015 annual report, state investors spent $5.1 billion on resorts and hotels last year — up from $1.4 billion in 2014 — and that upward trend looks set to continue in 2016.

Temasek Invests in Startup Companies

Singapore’s state investor Temasek Holdings continues to plow capital into innovative startup companies across the globe. This week, Temasek participated in a $43.5 million round of financing for Lexington, Massachusetts-based biotechnology firm Homology Medicines, which develops gene therapy technologies to treat rare diseases.

Temasek also contributed capital at British online fashion retailer Farfetch’s latest financing round, which raised a total of $110 million. The Singaporean fund may have approved of the London-based firm’s plans to expand its operations in China; Temasek is keen to invest in companies that stand to profit from the growing wealth of the Chinese middle class.

ADIA and GPFG Invest in Indian Dairy Company

Sovereign and government funds have ramped up their investments in India since the beginning of the year, attracted by the country’s strong economic growth. This week, the Abu Dhabi Investment Authority (ADIA) and Norway’s Government Pension Fund Global (GPFG) identified an opportunity to invest in the country’s growing dairy industry.

ADIA and GPFG agreed to act as anchor investors at the initial public offering of Mumbai-based dairy produce manufacturer Parag Milk and Foods. The company raised a total of 3.4 billion rupees ($51.5 million) from the two funds and other anchor investors ahead of its IPO yesterday. Parag is listing its shares on two stock exchanges in Mumbai: the National Stock Exchange and the Bombay Stock Exchange.

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