Government Fund Weekly News Roundup — New Results from Government Funds, More Brexit Bargain Hunting and Facing the Feds

July 22, 2016 by SWC Editors

  • Print
  • Please login

Loretta Lynch 2
U.S. Attorney General Loretta Lynch announcing civil forfeiture complaints against 1MDB. 
Photo: U.S. Department of Justice.

In the news this week: Three sovereign wealth funds have released financial results: the Abu Dhabi Investment Authority, China Investment Corp. and the State Oil Fund of the Republic of Azerbaijan. Singaporean state investor Temasek Holdings has purchased the city-state’s largest subway operator, SMRT Corp., taking it private. And Malaysian state development fund 1MDB is once again facing legal action — this time, in the U.S.

ADIA, CIC and SOFAZ Release Results

The Abu Dhabi Investment Authority (ADIA), China Investment Corp. (CIC) and the State Oil Fund of the Republic of Azerbaijan (SOFAZ) released their annual results this week. ADIA’s annual results for the year ended December 31, 2015 revealed that the fund’s long-term investment gains fell compared with 2014: Its annualized rate of return over the past 20 years has dropped from 7.4 percent in 2014 to 6.5 percent in 2015. Over the past year, ADIA has continued to cut the proportion of its assets managed externally (from 65 percent in 2014 to 60 percent in 2015) and trimmed the percentage of its assets invested in passively-managed or index-replicating strategies from 55 percent  to 50 percent over the same period. For those assets still invested in index-replicating strategies, ADIA has introduced a customized smart-beta portfolio designed to enhance returns.

CIC’s annual results — also for the year ended December 31, 2015 — revealed that the fund posted a loss of 2.96 percent on its investments, compared to a positive return of 5.47 percent in 2014. China's slowing domestic economy and volatile stock market negatively impacted CIC's returns; tumbling global commodities prices and an appreciating U.S. dollar also took a toll. Despite its negative investment return, CIC's assets under management grew by 9 percent over the past year, from $746.73 billion in 2014 to $813.76 billion in 2015.

SOFAZ’s latest results cover the first half of 2016. For the six months to June 30, 2016, SOFAZ reported growth of $1.5 billion in assets under management, with capital increasing from $33.5 billion to $35.1 billion during this period. Despite its promising start in 2016, however, SOFAZ has been obliged to make a $4.88 billion transfer to Azerbaijan’s state budget to help plug the gap in the oil-rich nation’s finances. SOFAZ plans to fund part of this transfer through foreign-currency auctions, such as the one it conducted last week.

NBIM Snaps Up Oxford Street Property

The bargain-hunting for U.K. assets in the wake of the so-called Brexit vote continues, with Norges Bank Investment Management (NBIM), the arm of the Norwegian central bank that oversees the country’s huge sovereign wealth fund, snapping up an office-and-retail property on London’s Oxford Street. NBIM bought the 59,000 sq. ft. property, known as Sedley Place, from an open-ended property fund run by Aberdeen, Scotland-based investment manager Aberdeen Asset Management. The sale went through just two days after Aberdeen reopened the property fund; the asset manager was one of several that either suspended or introduced redemption penalties on open-ended funds during the post-Brexit fallout. Aberdeen, which implemented a redemption penalty on July 7, lifted it on July 13.

Going Underground

Singaporean state investor Temasek has bought out the city-state’s largest subway operator, SMRT Corp., for S$1.18 billion ($869 million). Temasek already owned 54 percent of SMRT; the latest offer values SMRT at S$2.57 billion. SMRT plans to use the cash to pay down debt and improve the transport link’s services, which have suffered since the company began an ambitious expansion project five years ago. Given how long SMRT has been fending off disgruntled passengers, Temasek’s new acquisition may well provide the state investor with a bumpy ride.

The 1MDB Scandal: Sitting in the Dock Again

Debt-ridden, scandal-plagued Malaysian state development fund 1MDB is facing further court action — this time in the U.S., where federal prosecutors have launched lawsuits to seize assets allegedly purchased with misappropriated cash from the fund.

The move by U.S. authorities is part of an ongoing investigation into money laundering and other practices within 1MDB. Federal prosecutors are seeking assets said to be worth more than $1 billion. The laundry list of goodies includes corporations, real estate, fine art (paintings by Van Gogh and Monet are said to have been seized in Switzerland in relation to the lawsuit) and jewelry ostensibly purchased with stolen cash. The rights to Hollywood blockbuster "The Wolf of Wall Street," starring Leonardo DiCaprio, are also in the eclectic pile of assets.

1MDB is already defending itself against legal action in London, where the fund is being pursued by one of Abu Dhabi's sovereign wealth funds, the International Petroleum Investment Co. (IPIC), for approximately $6.5 billion following an ongoing series of disputes.

Updated Fund Profiles

Our market-leading fund profile library provides unrivalled analysis of more than 90 government and sovereign funds.

Register to read fund profiles

Recent SWF Investments

Search the database of direct investments and mandates by fund, industry and target market to identify past deals that match your requirements. Access over $1 trillion worth of transactions dating back to the 1960s.

Register to explore our data

Latest SWF News

Sovereign Wealth Center makes staying abreast of the most recent government and sovereign fund events easy. Our team undertakes a thorough review of global news feeds every morning and distills salient points.

Register for the latest SWF news
Join the discussion:

To be able to print this content,
you must be a subscriber

For details on your subscription options,
please contact: