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Treasury & Capital Markets / Europe
GIC caps active year with stake in US$5 billion deal
Singapore wealth fund joins with Carlyle and other firms to buy American Express corporate travel unit
Tom King 20 Dec 2019

Singapore’s sovereign wealth fund GIC has joined with private equity firm Carlyle Group and other firms in a deal to purchase a stake in American Express Company’s corporate travel business.  

The equity recapitalization deal, which includes debt, gives the unit, American Express Global Business Travel, an enterprise value of US$5 billion. Other investors in the transaction include Qatar Investment Authority, funds managed by BlackRock, and the University of California Office of the Chief Investment Officer of the Regents.

This investment by GIC, perhaps not the last of 2019, is the latest in what has been an active year for the Singapore state fund.

Real estate has featured prominently in the most significant transactions for GIC in 2019, with the Australian market being a key draw. As a long-term investor, GIC says its real estate investment strategy is to acquire and add value to quality assets in gateway cities.

In November, Singapore’s sovereign fund placed a bet on the future prospects of Parramatta, a fast-growing Sydney district which is transforming into a thriving secondary business hub. GIC and Charter Hall, an integrated Australian property group with a US$34.6 billion portfolio of more than 840 high-grade properties, entered into a joint venture (JV) to acquire Jessie Street Centre in Parramatta.

The Jessie Street Centre is a 15-storey A-grade office building with supporting retail offers and a net lettable area of 53,900 square metres. The property is 99.9% occupied with a weighted average lease expiry of 3.9 years. Financial details of the agreement were not released, however Australian media reported the GIC Charter Hall JV acquired the property from Brookfield Properties for about A$420 million (US$287.63 million).

Again in Sydney, in August the fund snapped up a share of a prime Sydney waterfront development when it acquired a 25.1% stake in Lendlease International Towers Sydney Trust from Canada Pension Plan Investment Board and Lendlease.

When complete, the development will include three major office buildings, 800 residential apartments and a hotel situated in the heart of Sydney’s CBD. Financial details of that deal were not disclosed.

In October, the wealth fund made a significant acquisition in France as it bought a Grade-A office tower located in the La Défense business district in Paris.

The building, PB6, is a grade-A office tower described as a 40-storey asset with 60,000 square metres of prime office space. PB6 is fully leased to Électricité de France S.A., an electric utility company largely owned by the French state. The wealth fund did not disclose details about the purchase price of the transaction but French media claimed the fund would be shelling out US$592.25 million for the building.

Turning to the US market, earlier this month, GIC announced the creation of a joint venture with New York-based RPT Realty, a publicly traded real estate investment trust which owns and operates a national portfolio of open-air shopping destinations principally located in key US locations.

The company contributed five properties valued at US$244 million to the joint venture, referred to as the RPT-GIC Venture (RGV), and received US$118.3 million for the 48.5% stake in RGV that was acquired by the Singapore fund.

GIC has also pledged up to US$200 million of additional capital to RGV over the next three years to fund its share of potential future acquisitions.

In a speech earlier this year, Lim Chow Kiat, GIC Chief Executive, stressed that in challenging market conditions, the sovereign wealth fund was sticking to core values. According to Lim, a fundamental rule is to cling to GIC’s mandate to preserve and enhance the real value of the national reserves which translates to giving priority to prudence.

GIC controls the eighth-largest sovereign wealth fund in the world, with about US$440 billion in assets under management as of mid-2019.

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