GIC Pte’s investment in U.K. roadside assistance company RAC Ltd. shows the state fund’s commitment to private equity, an asset class that will attract more sovereign funds, according to IHS Global Insight. (INSDHYS)
Carlyle Group LP (CG) agreed to sell a stake in the U.K. firm to GIC, the Washington-based asset manager and the Singapore state fund said in a statement yesterday.
Carlyle and GIC will jointly own a majority stake in the business with RAC management holding the remaining shares, according to the statement, which didn’t disclose the value of the transaction.
There has been a shift by sovereign wealth funds since 2009 to increase their asset allocation to private equity to boost returns, said Rajiv Biswas, the Singapore-based chief economist for the Asia-Pacific region at IHS, a researcher on macroeconomics and sovereign wealth funds.
“GIC has a long track record spanning back to 1982 of investing in private equity,” Biswas said. Private equity “is still a relatively new style of investing for many sovereign wealth funds, and more of them are likely to invest in this asset class in the future.”
Private equity made up 9 percent of GIC’s portfolio as of March 31, according to its latest annual report published in August. That compares with 3.7 percent at Korea Investment Corp. as of December and 7.3 percent at Australia’s Future Fund (FGX) as of June 2013.
Norway’s state fund, the world’s biggest, doesn’t invest in private equity. Among GIC’s recent transactions was the purchase of a 28.5 percent stake in Rothesay Life Ltd., a London-based insurer, from Goldman Sachs Group Inc. last year. Blackstone Group LP bought a stake of the same size from Goldman Sachs.
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“Among the sovereign wealth funds, GIC has been one of the most active private-equity investors last year and this,” said Kelly Teoh, a Singapore-based managing director at consulting firm I.R. Resources.
“If you compare the number and deal sizes amongst the others, it is definitely ahead of the pack.”
GIC benefits from consistent dividend payments by companies like RAC, Teoh said. The U.K. company “has been growing steadily if you look at their earnings,” she said.
Carlyle canceled a planned initial public offering for RAC on the London Stock Exchange following the GIC investment, the companies said yesterday.
Carlyle is the world’s second-biggest manager of investment alternatives to stocks and bonds. RAC is the U.K.’s second-largest roadside assistance provider with about 8 million roadside members as of June, according to the statement.
“Private equity has always been an important part of GIC’s portfolio,” said Enrico Soddu, an analyst at the London-based Institutional Investor’s Sovereign Wealth Center. “It fits their long-term horizon and helps them diversify their portfolio.”
bloomberg.com
Carlyle Group LP (CG) agreed to sell a stake in the U.K. firm to GIC, the Washington-based asset manager and the Singapore state fund said in a statement yesterday.
Carlyle and GIC will jointly own a majority stake in the business with RAC management holding the remaining shares, according to the statement, which didn’t disclose the value of the transaction.
There has been a shift by sovereign wealth funds since 2009 to increase their asset allocation to private equity to boost returns, said Rajiv Biswas, the Singapore-based chief economist for the Asia-Pacific region at IHS, a researcher on macroeconomics and sovereign wealth funds.
“GIC has a long track record spanning back to 1982 of investing in private equity,” Biswas said. Private equity “is still a relatively new style of investing for many sovereign wealth funds, and more of them are likely to invest in this asset class in the future.”
Private equity made up 9 percent of GIC’s portfolio as of March 31, according to its latest annual report published in August. That compares with 3.7 percent at Korea Investment Corp. as of December and 7.3 percent at Australia’s Future Fund (FGX) as of June 2013.
Norway’s state fund, the world’s biggest, doesn’t invest in private equity. Among GIC’s recent transactions was the purchase of a 28.5 percent stake in Rothesay Life Ltd., a London-based insurer, from Goldman Sachs Group Inc. last year. Blackstone Group LP bought a stake of the same size from Goldman Sachs.
Leading Investor
“Among the sovereign wealth funds, GIC has been one of the most active private-equity investors last year and this,” said Kelly Teoh, a Singapore-based managing director at consulting firm I.R. Resources.
“If you compare the number and deal sizes amongst the others, it is definitely ahead of the pack.”
GIC benefits from consistent dividend payments by companies like RAC, Teoh said. The U.K. company “has been growing steadily if you look at their earnings,” she said.
Carlyle canceled a planned initial public offering for RAC on the London Stock Exchange following the GIC investment, the companies said yesterday.
Carlyle is the world’s second-biggest manager of investment alternatives to stocks and bonds. RAC is the U.K.’s second-largest roadside assistance provider with about 8 million roadside members as of June, according to the statement.
“Private equity has always been an important part of GIC’s portfolio,” said Enrico Soddu, an analyst at the London-based Institutional Investor’s Sovereign Wealth Center. “It fits their long-term horizon and helps them diversify their portfolio.”
bloomberg.com
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