London: Sovereign investors participated in deals worth a record $42 billion (Dh154 billion) in the first quarter, led by Singapore fund GIC’s involvement in the two biggest transactions, which accounted for $29.6 billion combined.
GIC and the Canada Pension Plan Investment Board (CPPIB) are investing alongside US private equity firm Blackstone in its $17 billion acquisition of a majority stake in the Financial and Risk business of Thomson Reuters Corp — the quarter’s largest deal.
GIC also partnered with Carlyle Group, another private equity firm, to acquire Akzo Nobel’s Specialty Chemicals business for $12.6 billion.
These two massive deals helped boost the overall value of first-quarter transactions to $42.4 billion across 39 deals according to Thomson Reuters data, up from just $18.3 billion across 55 deals in the fourth quarter of 2017.
GIC was also involved in the third-largest deal alongside Saudi Arabia’s Public Investment Fund (PIF) and other investors. They agreed to pay $5.4 billion for 55 per cent of French group AccorHotel’s AccorInvest property business.
Analysts expect PIF to become more active and enter new sectors following the creation of the $93 billion Vision Fund with Softbank, which focuses on tech.
“And whenever they enter a new sector they come like an elephant, providing record capital commitments,” said Javier Capape, a director at the Sovereign Wealth Lab research centre in Madrid.
Dependency on oil
Softbank and Saudi Arabia have already agreed to create the world’s biggest solar power project in Saudi Arabia.
“There is a long-term vision for how the economy should shape up, and part of it is a more active role played by PIF ... to help reduce the dependency on oil revenues,” said Nikhil Salvi, a senior manager at Aranca, an investment research and analytics firm.
Other Middle Eastern funds Mubadala and Abu Dhabi Investment Authority were also active. Mubadala Petroleum, wholly-owned by Mubadala, struck a $934 million deal with Eni for a 10 per cent stake in Egypt’s Zohr gasfield.
Following a merger last year with the International Petroleum Investment Co. (IPIC), Mubadala is now joining with Abu Dhabi Investment Council (ADIC) for a combined portfolio worth over $200 billion.
This is expected to improve Mubadala’s global clout and allow it to enter more large-scale deals.