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Sovereign wealth fund deals down 17 pct in first quarter

Published 2016-04-06, 03:24 a/m
Updated 2016-04-06, 03:30 a/m
© Reuters.  Sovereign wealth fund deals down 17 pct in first quarter

* But value of deals up sharply year on year
* Total of 46 deals in Q1, down from 51 in Q4
* Biggest was for Australian ports and rail operator

By Claire Milhench
LONDON, April 6 (Reuters) - Sovereign wealth funds made
$19.2 billion worth of overseas acquisitions in the first
quarter, down almost 17 pct from the previous quarter but
rebounding from $4.8 billion a year earlier.
Thomson Reuters data showed that SWFs, which invest windfall
revenues from oil and other commodities for future generations,
were involved in 46 deals, down five from the previous quarter.
Industry experts said this did not represent a meaningful
drop off.
"The number of deals is a little more indicative than the
value, which can fluctuate depending on what's on offer," said
Elliot Hentov, head of policy and research in the official
institutions group at State Street Global Advisors.
The single biggest deal was the still pending $9.5 billion
bid for Australian ports and rail operator Asciano, which will
see the business split into two units.
Singapore's GIC GIC.UL and the Qatar Investment Authority
are amongst the consortium partners for part of the ports
business, while the Canada Pension Plan Investment Board (CPPIB)
and China Investment Corp CIC.UL are amongst those bidding for
the railways business.
The second biggest investment in the quarter was in China
Internet Plus, created by merging Meituan and Dianping, which
raised over $3.3 billion in a funding round.
Singapore's state investment firm Temasek Holdings TEM.UL
and the CPPIB were amongst participants.
There were fewer real estate deals, but direct investments
in companies covered a range of sectors including internet
services and retail to financials, chemicals and
pharmaceuticals.
Sven Behrendt, managing director of GeoEconomica, a
Geneva-based consultancy, said this showed SWFs were still
actively engaging in global markets. "Despite low oil prices and
revenues, SWFs continue to diversify their portfolios."
Ashby Monk, research director of Stanford University's
Global Projects Center, and an expert on SWF investment trends,
added that bringing assets in-house led to outperformance, so
going direct was likely to remain popular.
Deal flow is traditionally lumpy.
In recent weeks oil-backed SWFs including Norway's have
reaffirmed their commitment to real estate investment
while Saudi Arabia has stated it will set up a $2
trillion fund for the post-oil era.
"It does sound as if there is a commitment to long-term
investing and harvesting an illiquidity premium," said State
Street Global Advisors' Hentov.

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