Sovereign wealth funds (SWFs), the big government-owned investing institutions, had a year of record activity in 2013, with the highest levels ever of direct transactions, showing a strong recovery from the financial crisis.
According to the Sovereign Wealth Fund Institution, an American organisation that tracks SWF performance, some $174 billion of direct transactions took place during the year, way ahead of 2012’s $65.09bn.
“This rebound of direct transactions reflects sovereign funds’ growth in assets, maturation of internal operations in the larger funds and improved confidence in the world economy,” said the institute.
Abu Dhabi Investment Authority (Adia) was one of the most active, according to the institute, with $7.93bn of deals in the year, behind only funds from Norway and Singapore in terms of investment activity.
The institute said: “Adia’s buying splurge of core assets in Europe and Australia has pushed up the level of direct investment activity in both observed deals and transaction amounts for the fund. In 2013, Adia accelerated its hiring programme, picking up experienced private equity and investment banking professionals from Europe.
“This has allowed the sovereign fund to seek out more direct deals. In January 2013, Adia bought 90 Boulevard Pasteur through LaSalle Investment Management from Crédit Agricole for €250 million [Dh1.26 billion]. Moving toward equities, Adia has augmented participation in initial public offerings.”
A spokesman for Adia declined to comment on the institute’s findings. He also declined to confirm another of the institute’s surveys that showed Adia with $773bn of assets under management, the second highest total.
The institute also highlighted activity by another investing institution in the capital, the Abu Dhabi Investment Council (Adic), which “extended investment activities into private equity, real estate and infrastructure. A prime instance is Adic’s involvement in the group that purchased the 14- storey Shiba Park Building in central Tokyo”, said the institute.
The biggest and most active global players among the SWFs remained the Norwegians, the institute said, with some $124.7bn of transactions in 2013 by its principal funds.
“Norway’s Government Pension Fund Global, invested through the Norges Bank Investment Management unit, wins the prize for being the most active sovereign wealth fund for 2013, for two reasons: first the SWF has purchased over 5,000 equity transactions worth over a million in 2013.
“Second, the fund has taken an enhanced active approach when it comes to corporate governance and environmental standards.”
The institute noted that the Norwegian fund has taken part in IPOs ranging from Formula One’s launch “to the lofty Hong Kong IPO of China Cinda Asset Management, one of China’s major bad debt managers.”
The institute added: “Besides the equity transactions, the Norwegian sovereign wealth fund has made its mark in institutional real estate. With a 5 per cent target allocation to real estate, the largest SWF in the world inked deals with Metlife and Prologis – acquiring large portfolios of real estate assets.”
Second in the institute’s ranking table came the two big SWFs from Singapore, Temasek and GIC, with a total of $28bn invested in 481 transactions in 2013.
The institute said: “Temasek and the renamed GIC Private have seized many small to medium-sized stakes in businesses globally. Temasek has engaged in huge transactions like buying a 4.6 per cent stake for €600m in Evonik Industries, a German speciality chemical manufacturer. It has rejigged its portfolio, favouring consumer-based companies over the past preference of financial institutions.”
“Flipping to the other side, GIC has triumphed over Temasek in the total dollar amounts of transactions and number of observations for 2013. GIC has become emboldened in dealing with other private equity firms. The SWF has partnered with private equity firms like Bain Capital on its takeover of BMC Software,” the institute added.
fkane@thenational.ae
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