Here are some of his recent investments – Health Guild News


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Last month I tried Temasek, now is the time to take a closer look at his older brother. Singapore’s sovereign wealth fund, GIC, released its annual report in July, but, as always, the figures are not complete, as some remain withheld.

Officially, GIC does not report either the total assets managed or the one-year rates of return (which is understandable, of course, given its long-term investment horizon). However, independent analysts provide estimates of both the performance and the value of their portfolio.

Global SWF, a three-year platform that tracks sovereign wealth and pension funds founded by a former global director of PWC and CEO of SWF practices at PwC, calculated that CPG results have reached a record high. 37.5% in the last year ending March 31, surpassing even the typically more aggressive Temasek, which returned 24.5%.

Its estimates also place the total AUM figure at US $ 744 billion, or just over $ 1 trillion, for the first time in GIC history.

It should be noted after a few years of stability in the performance of the fund, as shown in this chart below (the figures are in US dollars). It turns out the pandemic was pretty good for business.

Image credit: Global SWF

Singapore continues to get rich thanks to COVID-19

While exploring a few weeks agoThe global Covid-19 crisis has made the prudent city-state richer by several hundred million dollars, due to stock market concentrations around the world (the result of a fiscal and monetary stimulus unleashed to combat the crisis virus-induced economic growth). with an increase in demand for the Singapore dollar.

It turns out that my previous estimates of over A $ 200 billion that Singapore has probably earned over the last year have been pretty cautious. If the above figures are accurate, the correct number easily exceeds US $ 400 billion, given the increase of A $ 260 billion in the value of GIC holdings, in addition to the US $ 181 billion obtained through to a combination of growing foreign reserves and Temasek’s portfolio, even after subtracting government Covid-19 support packages, which will amount to approx. $ 54 billion by the end of this year.

It’s time to go shopping

Given these magnificent amounts, you may now be thinking, “Great! What can we spend it all on?” But the answer is, alas, “not much.” For that:

Singapore’s foreign reserves protect foreign exchange rates and are not intended to be freely extracted. Sometimes some amounts are transferred to GIC for a more profitable investment, but ultimately billions of dollars in MAS remain in liquid assets to ensure that SGD is neither too strong nor too weak.

Billions in Temasek are invested in equities, some of which can be quite liquid, but are usually long-term investments. A quarter of its portfolio is tied to Singapore and critical companies such as Singapore Airlines. In addition, about 45% is in unlisted assets that would be difficult to liquidate.

Finally, there is GIC, which indirectly manages money from the Central Pension Fund (CPF), as the proceeds from sales of special bonds that protect your CPF savings are transferred to the investment.

CPF balances by account type / Image credit: CPF

Current CPF balances they stand at A $ 485 billion – almost half of the total assets of the CPGs. The remaining $ 500 billion in the trillion-dollar pile would technically form part of national reserves, but the company must maintain a good buffer, assuming future economic crises could erode the value of its portfolio (while millions Singaporeans have a legal right to constant returns from their CPF).

Its main role is not to invest aggressively, but to maintain a fairly low risk profile, with an above-average return over a horizon of several decades.

Hypothetically, between Temasek and GIC there could be reserves worth $ 200-300 million, which could theoretically be developed without much hassle, if the companies liquidated some of their positions (and the government had the mandate to withdraw that amount). of exorbitant money). of couse). But even in this fantastic scenario there is a problem: since these investments are kept in foreign currencies, they should first be exchanged for Singapore dollars, massively influencing currency exchange rates (as the funds would liquidate the assets foreigners).

As you can see, it is not so easy to catch and spend hundreds of billions, which is why the stable returns in the form of NIRC (Net Investment Contribution) Reaching the budget each year (for about $ 20 billion) is a much more reasonable way to use Singapore’s growing reserve money cushion, without interrupting anything else in the process (and ensuring that these returns gradually increase over time ).

But there is another way that Singaporeans can benefit from GICs, and it is learning from their prudent management. So here’s a look at some of its investments made last year, as it has been the most active fund globally, with more than $ 17.7 billion ($ 24) deployed in the 2020 calendar.

GIC was the most active state-owned investor in the last 2 years and remained in the Top 3 of five of the previous six / Image Credit: Global SWF

GIC investments in 2020

Where did Singapore’s first investment corporation place its bets during the pandemic? Here are a handful of the 65 offers he made in 2020.

Along with Temasek, GIC is one of the largest investors in technology.

Image credit: Global SWF

GIC was the largest investor in the data center industry, providing almost a third of the investment. Much of this was spent on a joint venture with US $ 1 billion Equinix develop and operate high-scale data centers in Japan to support the workload deployment needs of a specific group of larger-scale enterprises, including the world’s largest cloud service providers. The company follows a similar agreement signed in 2019 by partners for high-scale data centers in Europe, indicating a long-term partnership in the sector.

World SWF Report

This deal has since been expanded, with another $ 3.9 billion pledged by Equinix and GIC to expand to 32 data centers worldwide.

Equinix and GIC add $ 3.9 million to grow 32 facilities worldwide: Cloud7 News
Data Center View / Image Credit: Equinix / GIC

In India he has made deals with the environs Reliance Retail, a subsidiary of Reliance Industries, the most valuable Indian company run by the richest man in India (and Asia), Mukesh Ambani. Together with TPG (formerly Texas Pacific Group) invested $ 1 billion in retail in the fall of 2020.

In a parallel investment, led by Canadian Brookfield and the British Columbia Pension Fund, GIC acquired its telecommunications tower operator from Reliance. Tower Infra Trust, for 3.4 billion US dollars combined (with GIC a 55% stake).

And, in collaboration with SAFE-DEPOSIT BOX, put US $ 670 million into India’s leading mortgage lender and the largest private bank HDFC.

GIC buys LG Twin Towers in Beijing for more than $ 1.59 million, economic news and highlights - The Straits Times
LG Twin Towers, Beijing / Image Credit: Straits Times and GIC

On Chinese soil, GIC continued to be one of the leading real estate investors in buying LG Twin Towers in Beijing (pictured above) and another 1.1 million-square-foot office building in the capital, along with an AEW real estate manager. With Yanlord, a Chinese real estate developer listed in Singapore, GIC has taken a 49% stake in a $ 1.466 billion joint venture to develop integrated commercial / residential properties in China. He joined CITIC in its logistics real estate fund and in a strategic investment a Xugong Group Construction Machinery. And a stake in Ming Yuan Cloud Group also provides you with a share of the real estate software market.

With Temasek he invested in an EdTech startup Yuanfudao, which was worth more than US $ 15 billion last year, although this particular deal may turn sour after Beijing’s crackdown on mentoring companies (it can’t earn it all). But, perhaps, his involvement in Get up, which specializes in STEM education and is taking advantage of cloud computing, artificial intelligence and the Internet of Things, will yield better results.

This adds to their other offerings at GigaDevice Semiconductor (manufacturer of flash memory chips) and IPOs of Yihai Kerry Arawana (food processing company) and bottled water manufacturer Nongfu Spring’s, Launching US $ 1.1 billion into the stock market.

Adnoc and Singapore GIC sign $ 600 million pipeline infrastructure agreement
Image credit: The National AE

In the United Arab Emirates, Singapore’s leading SWF participated in one of the largest infrastructure investments, acquiring – in a consortium with several international partners – a 49% stake in Abu Dhabi National Oil Company pipeline assets, worth US $ 10 billion.

In Australia, with the Hong Kong list ESR Caiman, GIC acquired a real estate portfolio of $ 4 billion. In California he led a round of US $ 353 million in funding Apeel Sciences, which is creating solutions for food waste and a round of US $ 500 million Affirm, a San Francisco fintech startup launched by PayPal co-founder Max Levchin (which offers late payments for e-commerce).

With an average of about five bids for a total of $ 2 billion a month, GIC was the most active state investor (SIO) in the world in 2020.

While we certainly can’t judge the company for a one-year performance (which is why it doesn’t report it on its own), its long-term consistency has made it one of the most successful SIOs in the world.

And today, decades of prudent financial management have proven their worth during the worst pandemic of a century, growing Singapore’s financial cushion unlike any other time in the past.

Featured Image Credit: Bloomberg

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