Singapore’s GIC led first quarter sovereign investor deals

Logo of GIC, Singapore's sovereign wealth fund.

Singapore’s $344 billion GIC led the sovereign investor pack in the first three months of 2017, sealing two of the biggest investments of the quarter.

Wealth funds and state pension funds participated in a total $9 billion of deals in January-March.

GIC teamed up with private equity firm Hellman & Friedman in a $1.9 billion deal for a 75 percent stake in Spain’s Allfunds Bank, and paired with Paramount Group to acquire 60 Wall Street, a “trophy asset” in downtown Manhattan, for $1.04 billion. The 47-storey tower serves as the U.S. headquarters of Deutsche Bank.

GIC, which was involved in at least 12 deals over the quarter, was also part of an investment with the Canada Pension Plan Investment Board (CPPIB) and property owner Scion Group for three U.S. student housing portfolios worth over $1 billion.

The Singaporean fund has been very active in the last six months, having secured the biggest real estate deal of the fourth quarter of 2016, when it paid $2.7 billion for P3 Logistic Parks, a European warehouse company.

In GIC’s last annual report, chief investment officer Lim Chow Kat said the fund would look for bargains during periodic spikes in market volatility. It continued to see opportunities in private equity, real estate and infrastructure, Lim said.

GIC is funded from government budget surpluses generated from trade rather than commodities, so it has been less constrained over the last two years compared with some of its oil-backed peers, hit by plunging prices.

“Given the high competition for assets, especially in private markets, it makes sense that Middle East funds are losing some of these deals,” said Javier Capape, a director at the Sovereign Wealth Lab research centre at the IE Business School.

He added that oil price uncertainty had encouraged some sovereign investors to be more prudent and deploy more capital at home, although these deals weren’t always publicised.

TOTALS

At $9 billion, total deal value for the first quarter was down 64 percent from fourth quarter 2016, with fewer of the chunky infrastructure and real estate deals that boosted the overall value in the previous quarter.

However, the number of deals was almost unchanged at 33, versus 34 in the fourth quarter of 2016.

The quarter’s second biggest deal was China Investment Corp’s move to raise its stake in China Everbright Bank for $1.27 billion. But there was nothing as large as the previous quarter’s Rosneft deal.

There were signs of growing sovereign investor interest in the funding rounds of high tech start-ups.

These are seen as a portfolio hedge against more traditional companies that could be overtaken by digital disruptors, Capape said, citing the example of hoteliers’ profits being affected by online room renting service Airbnb.

But because the failure rate amongst start-ups is high, SWFs are spreading their investments across a number of players.

For example, GIC participated in a funding round for China’s NextEV, which is building self-driving electric vehicles , and invested in China’s Advanced Leading Technology Group, also focused on electric vehicles.

Australia’s Future Fund participated in a funding round for Fugue, a start-up developing an operating system for cloud computing. Although the amounts committed are relatively small, the number of deals is growing as SWFs try to get in at the ground floor.

Student housing also remained popular, with GIC snapping up Birmingham-based Aston Student Village for $283 million in February, in conjunction with Unite Students.

Student accommodation is seen as having greater resilience to the general economic cycle than retail or office space.

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Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.