No deal too quirky for GIC in bid to diversify

The logo of the Government of Singapore Investment Corp (GIC). x
The logo of the Government of Singapore Investment Corp (GIC). x PHOTO: ST FILE

Singapore sovereign wealth fund GIC is casting its net wide and has found deals even in seemingly unexpected places, in a bid to make its portfolio more resilient amid rising uncertainty and slow global growth.

In recent years, GIC has invested in a range of assets from tech and student housing to pizza restaurants and a genealogy platform.

GIC recorded a dip in real returns in its latest review as it expects the global economic and geopolitical outlook to be more uncertain.

Its 20-year annualised real rate of return - its most important benchmark - was 3.7 per cent for the year ended March 31, down from the previous year's 4 per cent.

This means GIC enhanced its portfolio by an average return of 3.7 per cent per year, over and above the global inflation rate between April 1997 and March this year. It also means that the purchasing power of funds invested with GIC has more than doubled since 1997.

Tech investments are a key focus for the fund, whose assets under management have been estimated at about US$353.6 billion (S$489.9 billion) by the London-based Sovereign Wealth Centre.

Among GIC's largest publicly announced investments last year was its purchase of a US$500 million stake in Chinese e-commerce behemoth Alibaba Group Holding from SoftBank Group, alongside Temasek Holdings, which made a similar-sized acquisition. GIC had been a long-time investor in Alibaba even before the e-commerce giant's initial public offering in 2014.

In recent years, GIC has also made a significant push into the student housing market. It was one of the first institutional investors to move into the sector and has since become a major player.

In March, a joint venture entity formed by GIC, the Canada Pension Plan Investment Board and United States real estate operator The Scion Group acquired three US student housing portfolios for about US$1.6 billion. This followed a £227 million (S$404.6 million) 50:50 joint-venture deal announced in February with British-based student accommodation developer and manager Unite Students to acquire a student village on Aston University's campus in Birmingham.

GIC has also entered into a steady stream of other real estate deals. It announced a partnership last April with South Korean retail giant Shinsegae to develop a prime retail mall in the Incheon Free Economic Zone.

Affiliates of the two firms entered into a US$197 million agreement for a 60,000 sq m site in the international business district of Songdo.

There have also been quirkier deals. Last April, GIC announced that it had signed an agreement with American private equity firm Silver Lake to acquire substantial equity stakes in Ancestry.com, a provider of online family history data and personal DNA testing.

GIC, which was already an investor in Ancestry, did not disclose the investment amount and its eventual equity stake.

Ancestry uses the information found in its digitised historical records, subscribers' family trees, as well as DNA samples to help people gain insights into their heritage.

GIC also teamed up with Philippine conglomerate Century Pacific Group to buy the owner and operator of the Shakey's pizza chain in the Philippines, for an undisclosed amount early last year. Shakey's Pizza Asia Ventures has since launched an initial public offering on the Philippine Stock Exchange.

A version of this article appeared in the print edition of The Straits Times on July 11, 2017, with the headline 'No deal too quirky for GIC in bid to diversify'. Print Edition | Subscribe