In the news this week:
Sovereign wealth funds target energy and transport
infrastructure in emerging markets. The Kuwait Investment
Authority and the Abu Dhabi Investment Council mull asset
sales. And the Libyan Investment Authority and Abu
Dhabi’s International Petroleum Investment Co.
start legal proceedings in London.
Highways to Sell: Infrastructure Deals Abound
The old adage is that you wait ages for a bus and then two
come along at once. The same appears true of big sovereign
wealth fund infrastructure deals.
This week, state-owned private equity fund the Russian
Direct Investment Fund (RDIF) announced it will team up with
several unnamed Middle-Eastern sovereign wealth funds to
renovate a motorway running between Moscow and the port of
Novorossiysk on the Black Sea. RDIF and its partners will work
with the government-owned Russian Highways State Co. on the
project, which will involve the construction of toll points
along the route.
As RDIF and its Middle Eastern partners invest in a toll
road in Russia, another sovereign wealth fund, the Abu Dhabi
Investment Authority (ADIA) may sell its stake in a
company operating an Australian highway. ADIA is reportedly
sounding out potential buyers for some of its shares in
Melbourne-based toll road operator Transurban Group in a block
trade. ADIA first invested in the company in 2011.
Energy infrastructure assets in big emerging markets have
attracted the attention of government funds this week. A
consortium that includes two SWFs, the China Investment Corp.
and Singapore’s GIC, is reportedly in the running
for a Brazilian gas pipeline network currently owned by
Brazil’s embattled state-run oil giant
Petróleo Brasileiro (commonly known as
Meanwhile, a consortium that includes Canadian pension plan
Caisse de dépôt et placement du Québec and
sovereign funds the Kuwait Investment Authority (KIA) and the
State General Reserve Fund of the Sultanate of Oman have set up
a Singapore-based holding company to buy power generation
assets in India. These three funds will own 65 percent of the
capital in the holding company, known as Resurgent Power.
A Sellers’ Market?
KIA is reportedly mulling a sale of its 4.82 percent stake
in French nuclear power and renewable-energy conglomerate
Areva. KIA — Areva’s second-largest
shareholder after the French state, which holds about 87
percent of the company — paid €600 million ($676
million) for its stake. But the sovereign wealth fund may now
sell following years of losses at Areva that have seen the
company's share price plunge by approximately 90 percent since
Meanwhile, the Abu Dhabi Investment Council (ADIC) has
disposed of its 50 percent stake in Hamilton, Bermuda-based
financial services company Ariel Reinsurance. ADIC co-owned
Ariel alongside São Paulo-based investment bank BTG
Pactual, which has been forced to sell assets and raise
more capital to restore investors' confidence since the
November 2015 arrest of the bank's former CEO (and shareholder)
Two Separate Showdowns Begin in London’s
While some visitors to the U.K.’s capital might
want to take in Big Ben, Buckingham Palace and the London Eye,
the only sights two SWFs wanted to take in this week were the
inside of the city’s courtrooms.
Libya’s sovereign wealth fund, the Libyan
Investment Authority (LIA) is squaring off against New
York-based investment banking giant Goldman Sachs Group in a
trial that began at London’s High Court on Monday.
In a lawsuit, LIA claims that the financial services powerhouse
exploited a position of trust by persuading LIA to invest more
than $1 billion in structured products that lost all their
value in 2008 — a claim that Goldman Sachs
A stone’s throw from the High Court, at the
London Court of International Arbitration, one of Abu
Dhabi’s sovereign wealth funds, the International
Petroleum Investment Co. (IPIC), has launched legal proceedings
of its own. IPIC is pursuing Malaysia’s
scandal-hit state-owned development fund 1Malaysia Development
(1MDB) for an eye-watering $6.5 billion it says it is owed
following a series of disputes with the fund. The latest
conflict centers on 1MDB’s default on a
scheduled payment to IPIC of $1.1 billion after the Abu Dhabi
fund agreed to pay interest on two 1MDB bonds issued in
Lots of Help to Buy
Last week, QIA closed a deal to buy the 43-story Asia Square
Tower 1 complex in Singapore for $2.45 billion. Located in the
city-state’s Marina Bay business and financial
district, the complex includes office and retail space. This
week, QIA was reported to be in the early stages of
negotiations with several banks to arrange a mega-mortgage
worth $1.5 billion to $2 billion to finance the purchase.