Government Fund Weekly News Roundup — SWFs Maintain a Broad Appetite for Investment

August 12, 2016 by SWC Editors

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Variety is the spice of life and sovereign wealth funds have been investing in a wide range of assets this week. Australian roads and buildings have attracted considerable interest from government funds, Indian banks and shopping malls have also drawn scrutiny, and new technology and medical companies remain hot properties. Meanwhile, Turkey made progress in formalizing its own SWF and major changes are on the way for Saudi Arabia’s Public Investment Fund.

Funds have been looking at property in the Australian city of Melbourne.

Korea and Canada buy into Australia; Abu Dhabi exits

A number of SWFs were looking at assets in Australia this week. Korea Investment Corp. (KIC) was reportedly part of a consortium that bought a 50 percent stake in the city of Melbourne’s Southgate Complex for A$289 million ($221 million). The consortium has also acquired an option to buy the other half of the complex for the same price, according to media reports.

Canada’s government pension fund Caisse de dépôt et placement du Québec (CDPQ) has bought a 20 percent share in Plenary Group Holdings, which controls all the Australian operations and assets of Melbourne-based public infrastructure developer Plenary Group. CDPQ has been a long-term partner of Plenary, having invested more than A$200 million ($152 million) in Plenary-originated projects in Australia since 2012, including police, court and defense force facilities.

The Abu Dhabi Investment Authority (ADIA), meanwhile, took to the roads, selling its stake in toll-road operator Transurban. The shareholding was thought to be worth around A$254 million ($196 million), or around one percent of the company.

Indian shopping malls and infrastructure stand tall

Two sovereign wealth funds are reportedly in talks to buy stakes in an Indian infrastructure company, while another has been taking a look at the country’s shopping malls. The government pension manager Canada Pension Plan Investment Board (CPPIB) and Singaporean investor Temasek Holdings are mulling stakes in Mumbai-based developer Infrastructure Leasing & Financial Service (IL&FS). Two local banks are selling their stakes, worth around $224 million, but the sovereign funds are thought to be facing competition from other investors interested in the deal. The Abu Dhabi Investment Authority (ADIA) already owns 12.56 percent of IL&FS and could be looking to increase its stake.

Singapore’s Government Investment Corporation (GIC) is considering adding to its investments in India’s retail property sector. GIC has reportedly held talks with Mumbai-based developer Oberoi Realty regarding a possible joint venture. Oberoi has an existing mall in the city and is seeking a partner for two more. A deal would fit with GIC’s previous investment of around $52 million for a 50 percent stake in another existing Mumbai mall.

Finally, Temasek is also said to be one of the parties in talks with Hero FinCorp, the financial services arm of Delhi-based motorcycle manufacturer Hero MotoCorp, regarding a $100 million fundraising exercise being carried out by the Indian company.

New technology and medical treatments offer potential

New technology firms and medical treatments offer potential for spectacular growth if their products are able to find a receptive audience. SWFs have continued to balance their investments in steadier, more established industry sectors with moves towards the cutting edge of technology. This week, Australia’s Future Fund led a $50 million equity-financing drive for San Jose, California-based data processing company MapR Technologies. MapR helps companies including American Express, Audi and Ericsson to manage and analyze their information. 

Canada’s CPPIB has paid $100 million for a proportion of royalty interests from a new cancer-treatment therapy being developed by the Boston-based medical research organization Dana-Farber Cancer Institute. CPPIB has also agreed to make up to $68 million of additional funding available if certain conditions are met. Meanwhile, Norway’s Norges Bank Investment Management, the arm of the central bank that oversees the country’s $860 billion sovereign wealth fund, has boosted its shareholding in Colombo, Sri Lanka-based telecommunications firm Dialog Axiata, adding around another $5 million of stock in the company to its portfolio.

Saudia Arabia’s PIF one step closer to transformation

The secretary general of Saudi Arabia's Public Investment Fund (PIF), Yasir Al-Rumayyan, has been named to the board of Saudi Aramco, one of the world's largest oil producers. The appointment of Al-Rumayyan to the board of Aramco is seen as a step on the way to PIF becoming majority owner of Aramco — and raising PIF's global profile as a sovereign wealth fund. The Saudi government says it will sell less than 5 percent of Aramco shares to the public by the end of 2018, with the rest of Aramco's ownership moving to PIF.

Meanwhile, Turkish Minister of Finance, Naci Agbal, revealed that a draft law to set up a sovereign wealth fund was being sent to the national parliament’s planning and budget commission. The fund is seen as a potential driver of domestic "mega-projects" in the future.

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