Published September 4, 2008

Temasek, GIC dominate world's largest SWF deals

The S'pore units invest a combined US$9.1b, 47% more than a year ago

By CONRAD TAN

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(SINGAPORE) Temasek Holdings and the Government of Singapore Investment Corp (GIC) have been involved in five of the 10 biggest deals involving sovereign wealth funds on record, according to the latest estimates by Thomson Reuters.

Singapore's two state-owned funds have poured billions into US and European banks since last year. The sheer size of their recent investments has surpassed many of the biggest purchases made by sovereign wealth funds in the past.

GIC's injection of 11 billion Swiss francs (S$14.24 billion) into Switzerland's biggest bank, UBS, last December is the single largest investment by a sovereign fund on record, according to data compiled by Thomson Reuters.

GIC was also part of the consortium led by Spain's Ferrovial Group that bought UK-listed BAA, the world's biggest airport operator, for £10.3 billion (S$26.7 billion) in May 2006. That deal, which also included Canadian pension fund Caisse, still stands as the largest investment involving sovereign funds on record.

So far this year, both GIC and Temasek have made a combined US$9.1 billion worth of investments, more than a third of all deals involving sovereign funds worldwide and a 47 per cent increase from a year earlier, according to Thomson Reuters estimates.

GIC invests Singapore's foreign reserves including pension savings, estimated at over US$300 billion, while Temasek manages a separate S$185 billion investment portfolio.

The bulk of these investments were in the US, the largest of which was GIC's US$6.88 billion investment in banking giant Citigroup in January.

That was the single biggest investment by any sovereign fund this year and the fourth largest on record.

GIC was also one of four investors in the fifth-largest sovereign fund deal on record - a £2.5 billion takeover of Associated British Ports, the UK's largest port operator, in March 2006.

GIC invests Singapore's foreign reserves including pension savings, estimated at over US$300 billion, while Temasek manages a separate S$185 billion investment portfolio.

Temasek's US$4.4 billion investment in US investment bank Merrill Lynch last December is the 10th largest sovereign fund deal on record. In January, two other sovereign funds, the Korea Investment Corp and the Kuwait Investment Authority, each poured another US$2 billion into Merrill.

Separately, Temasek invested £975 million in UK banking group Barclays in July last year. It is now likely to raise its stake in Merrill to as much as 14 per cent from about 9 per cent, after US regulators gave their approval this week (Aug 26).

Together, GIC and Temasek accounted for 10 of the 22 major deals involving sovereign funds this year, until Aug 28.

Investments by sovereign funds worldwide rose 65 per cent to US$25.5 billion, from US$15.4 billion for the same period last year, according to Thomson Reuters.