“braving the new world” sovereign wealth fund investment...

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BEIJING CHICAGO HONG KONGCAMBRIDGE DELHI DUBAI JOHANNESBURG

PARISLOS ANGELES MADRID MUMBAI MUNICH NEW YORKMOSCOW RIYADHLONDON

CASABLANCA

SAN FRANCISCO SÃO PAULO SEOUL SINGAPORE TOKYO TORONTO ZURICHSHANGHAI

“Braving the New World”

Sovereign Wealth Fund Investment in 2010

Victoria Barbary

May 2011

Copyright © 2011 by Monitor Company Group, L.P.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means — electronic, mechanical, photocopying, recording, or otherwise — without the permission of Monitor Company Group, L.P.

This document provides an outline of a presentation and is incomplete without the accompanying oral commentary and discussion.

COMPANY CONFIDENTIAL

Direct Investments by SWFs Since 2000

In 2010, the number of direct investments by SWFs increased by more than 50% on 2009, but the reported value of these deals shrank by nearly a quarter.

169

192186

160

200

NumberValue ($Bn)

10996

113

146143

90

120

20

52

69

43

22

4634

4940

59656357

40

80

201115

6

2287354

02000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Q1

2010Q2 2010

2010 Q3 2010

Q4 2010

Note: Publicly available data for direct SWF equity & real estate deals, joint ventures and capital injectionsSource: Monitor-FEEM SWF Transaction Database

2ZAD-EDP-SWFs 2011-May 2011-VCB Copyright © 2011 Monitor Company Group, L.P. — Confidential

Value of SWF Investments by Target Sector

In 2010, SWFs returned to investments in financial services, and found investments in the commodity value chain attractive.

60 58 1US$ bn

5.950

60 58.13.6

EnergyCoal, Petroleum & Natural GasBanking, Insurance, TradingOther

5 01.71.5

40

31 0

10.2

Hotels, Restaraunts, MotelsConstructionSteel WorksMining

5.0

13.81.720

3031.03.4

21.614.9 Automobiles & TrucksTransportationRetailReal Estate

14.73.84.3

6.6

1 0

1.2

1.1

107.0

2.5

2.710.6

Other: Consumer Goods; Healthcare, Medical Equipment, Pharmaceutical Products; Recreation; Personal and Business Services; Printing & Publishing; Fabricated Products and Machinery; Communication; Aircraft ships and railroad equipment; Chemicals; Food Products; Beer and Liquor; Business equipment;

2.7 2.2 3.01.01.00

H2 2010H1 2010 H2 2009H1 2009


Fabricated Products and Machinery; Communication; Aircraft, ships, and railroad equipment; Chemicals; Food Products; Beer and Liquor; Business equipment; Business Supplies and Shipping Container; Business Equipment ; Steel Works ;and Wholesale.Publicly available data for SWF equity & real estate deals, joint ventures and capital injectionsSource: Monitor-FEEM SWF Transaction Database

SWF Investments in Financial Services, 2008-2010

SWFs’ direct investments in Financial Services are becoming more diverse

10.481.7100%

20.4

Banks

$bn

90%

80%

InsurancePrivate EquityBanks

Emerging Market Investment Funds

70%

60%

58.4%66.9%

76.6%OtherStock ExchangesOther Investment FundsAsset Managers

50%

40%

%

4.3%4.8%

8.2%

26.8%15.4%

3.1%4.9%

30%

20%

10%5.1%

1.5%4.1%5.6% 2.5%

10%9.7%

20080%

20102009


Note: Publicly available data for SWF direct investments, joint ventures and capital injectionsSource: Monitor-FEEM SWF Transaction Database

Geography of SWF Investments in Financial Services, 2008-2010

Emerging markets are becoming more important destinations for SWF investment in financial services

100% 81.7 10.4 20.4 $bn

80%

90%

100% 81.7 10.4

35.0%

20.4

OECDBRICOther Emerging & Frontier Markets

60%

70%67.0%

49.0%

26.9%60.6%

30%

40%

50%

23.4%

10%

20%

30%

24.0%

0%2008 2009 2010

9.7%4.4%

Note: Publicly available data for SWF direct investments joint ventures and capital injections


Note: Publicly available data for SWF direct investments, joint ventures and capital injectionsSource: Monitor-FEEM SWF Transaction Database

SWF investment in Real Estate 2005-2010

Since 2005, SWF investment in property has largely followed global market trends

12

$US Bn

10

11

1211.3

10.0EuropeAsia Pacif ic

MENANorth America

1 77

8

9 4.42.8

Other

5.9

1.7

2.44

5

6 5.5

3.72.7

0.55.9

3 4

0.92.5 2.4

1.9 2.2

1

2

34.20.5

0.8

3.4

0.91.0

0200720062005 2009 20102008

0.7 0.8 0.5

Note: Publicly available data for direct SWF equity & real estate deals joint ventures and capital injections



SWF investment in Real Estate 2005-2010

Breaking SWF real estate property purchases down by asset class, however, exposes the effect of the Global Financial Crisis

$US Bn

0.910

11

12

10.0

11.3

1.1

REITPropertyManagementDevelopers

7

8

92.6

REIT

0 1

0.2

4

5

60.6

2 5

5.9

6.03 7

5.5

9.3

2.7 2 3

0.1 0.30.1

1

2

3

43.42.53.7

3.5

5.2 0.7

1.42.3

0

1

2008 20102009200720062005

Note: Publicly available data for direct SWF equity & real estate deals joint ventures and capital injections



Value of SWF Investments by Target Region

Asia was the most attractive market for SWFs in 2010.

40Other

US$ bn

3031.1

3 9 North AmericaEuropeMENAAsia-Pacif icOther

1.52020.1

3.9

21.6

8.2

4.021.2

2.3

11 1

1.1 1.0

10

203.8

10.9

15.9

1.8

7.8

1.61.69.9

11.110

3.54.03 03.56.9

5.7

Other: Latin America, Sub-Saharan Africa, and Asia (Non-Pacific).Publicly available data for direct SWF equity & real estate deals joint ventures and capital injections

0Q4 2010

3.5

Q3 2010Q2 2010

3.0

H2 2010

3.5

H1 2010 Q1 2010


Publicly available data for direct SWF equity & real estate deals, joint ventures and capital injectionsSource: Monitor-FEEM SWF Transaction Database

Value of SWF Deals by Location of Target:

OECD vs. Emerging Markets

Reversing the trend of the last half-decade, SWFs turned their eyes to emerging markets in 2010.

5 752 768 8 20 2108 696 043 0 10 922 48 27 02 6 15 94 83 9 US$ bn100% 5.752.7

42%

68.8

10%

20.2108.6

27% 27%

96.0

14%

43.0

31%

10.922.48.2

9%

7.02.6 15.94.83.9

Emerging MarketsOECD

75%

69%

42%51%

58% 56%64% 61%

53%

75%

50%

73%

91%

69%

86%

73%

90%

25%

31%

58%

39%36%44%42%

49%

25%

47%

0%Q1

201020102009 Q4

2010200820072006 Q3

20102005200420032002 Q2

201020012000


Note: Publicly available data for SWF equity & real estate deals, joint ventures and capital injectionsSource: Monitor-FEEM SWF Transaction Database

Investment Flows: Middle Eastern SWF investments in 2010

Middle Eastern Funds rediscovered Asia in 2010, and invested heavily in Europe.

MENA to Russia & Central Asia5 deals, $1 bn

MENA to Europe

MENA to Asia Pacific

MENA to North America6 deals $1bn

MENA to Europe14 deals, $7.5bn

Pacific17 deals, $13.5bn

Within MENA25 deals, $1.7bn

6 deals, $1bn

MENA to Latin

MENA t S b

America1 deals, $2.7bn

MENA to Sub-Saharan Africa3 deals, $0.3bn


Investment Flows: Asia-Pacific SWF investments in 2010

By contrast, Asian SWFs sought out investments in North America, as well as looking to Asia.

Asia Pacific to Russia & Central Asia8 deals, $0.7bnAsia Pacific to Europe

11 deals, $1.7bn

Within Asia Pacific51 deals, $11.5bn

Asia Pacific to North America23 deals $8 6bn

11 deals, $1.7bn

51 deals, $11.5bn23 deals, $8.6bn

Asia Pacific to Sub-

Asia Pacific to Latin America3 deals, $0.6bn

Saharan Africa2 deals, $0.1bn


Biggest spending funds of 2010

100% 52.7

QIA and CIC accounted for over 40 percent of our SWFs’ annual direct investment expenditure

23%75%

8%

Mubadala Development CompanyChina Investment Corporation

OtherQatar Investment Authority

75%

19%

National Social Security FundKuwait Investment AuthorityKhazanah Nasional BhdInternational Petroleum Investment CompanyTemasek Holdings

15%

50%

10%

Libyan Investment AuthorityGovernment of Singapore Investment CorporationNational Social Security Fund

4%5%5%

25%5%

Other: Future Fund; National Pension Reserve Fund; Government Pension Fund-Global; Abu Dhabi Investment Authority; Korea Investment Corporation; New Zealand Superannuation Fund; Abu Dhabi Investment Council; State Oil Fund of the Republic of Azerbaijan; State General Reserve Fund; Oman Investment

0%

2010

3%2%


Zealand Superannuation Fund; Abu Dhabi Investment Council; State Oil Fund of the Republic of Azerbaijan; State General Reserve Fund; Oman Investment Fund; and Istithmar World PJSC.Note: Publicly available data for direct SWF equity & real estate deals, joint ventures and capital injectionsSource: Monitor-FEEM SWF Transaction Database

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