SWFs presence in the global markets has become a routine. Every day we read that a significant number of SWFs buy or sell shares of many companies located in different countries. Even though this activism, sovereign funds have been keeping a low profile, acquiring minor participations. They haven’t interfered with the management choices and they have in this way clearly behaved as passive investors.
Recently however something has changed. After the two unfortunate events that hit Malaysia Airlines, Khazanah Nasional, the country’s SWFs have decided to buyout the other shareholders, acquire full control and delist the company as part of an ongoing restructuring plan. In Bulgaria, the State General Reserve Fund, a SWF from Oman that owns 30% of the shares of the Corporate Commercial Bank has been discussing with the Bulgarian government a plan to stabilise the situation and rescue the bank. Last week GIC, one of the Singaporean sovereign funds acquired 50% of the assets of RAC becoming a strategic investor in the company together with the Carlyle Group.
These are three distinct events with significant differences with each other but they clearly show an emerging trend on the behaviour of SWFs, they indicate a shift from passive investors to more active investors. In a recent interview also Alasdair Warren, head of financial sponsors group for EMEA at Goldman Sachs commenting on the agreement between Carlyle Group and GIC said that it is likely that more acquisitions similar to this one are going to happen.
Copyright © 2014 Dini Sejko
The number of SCEs involved in foreign direct investments is increasing at a rapid pace as it is also increasing the amount of wealth that they manage. In its last estimation the Sovereign Wealth Fund Institute assessed it at $ 6,3648 trillion. Simultaneously with their number and size is also growing their global presence. Lately we have experienced a proliferation of their offices all around the world.
The most active in this sense is the Singaporean fund Temasek Holdings with a widespread presence in Asia with offices in Beijing, Shanghai, Hong Kong, Hanoi, Mumbai and Chennai. It has only one office in the European Union, in London and three offices in the Americas, in New York, Mexico City and Sao Paolo. Also the other Singaporean fund GIC is keeping pace with Temasek having offices in ten cities worldwide.
The Norwegian Government Pension Fund Global has a good presence in Asia with offices in Shanghai and Singapore and is very active in the Hong Kong stock exchange. It has offices also in London and New York. The Chinese Investment Corporation has offices in Hong Kong and Toronto.
The Gulf based funds are continuing to have only the resident headquarters with the exception of Mubadala Development Company that has set an office in Singapore.
Also the Canadian Pension Plan Investment Board has an extended global presence with offices in New York, Sao Paolo, London and Hong Kong.
For the moment the most attractive cities for the new offices of these funds have been Beijing and international financial centers such as Hong Kong, London, New York and Singapore.
This increased presence is a clear indication of their intention to massively expand their investments in a closer relationship with their host countries, ensuring a better protection of their investments through the available treaties. It will also provide them with an improved control on the management of the investments that they have already made and a better access to information for future investments.
Copyright © 2014 Dini Sejko