GIC retains position as most active state-owned investor: report

Singapore

SINGAPORE'S GIC retained its position as most active state-owned investor (SOI) for the second year running in 2020, based on a report by Global SWF, a data platform that tracks sovereign wealth funds and public pension funds.

On the back of the Covid-19 pandemic last year, GIC had deployed US$17.7 billion in 65 deals, lower than its US$24 billion deployed in 2019.

Coming in second was Canadian public pension fund CPP, which made US$15 billion in 33 investments, followed by Canadian fund CDPQ and UAE investment company Mubadala. Temasek Holdings was the fifth most active SOI, deploying US$11.3 billion in 52 investments.

Overall, SOIs made a total of 503 deals worth S$162.3 billion last year, down from 2019's S$199.4 billion across 499 deals.

The report studied 438 SOIs. These included sovereign wealth funds (SWFs) and public pension funds (PPFs), which jointly manage over US$27 trillion in assets. The report noted that the capital invested by SOIs "contracted significantly" in 2020.

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"During the peak of the pandemic, deals were negligible due to logistical problems - investment executives were unable to get their committees to sign off on their proposed acquisitions without a physical meeting. Later in the year, it was more a matter of caution, especially among those SWFs that could still face capital calls to cover fiscal deficits," it added.

Both GIC and Temasek are among the top 25 SOIs; GIC ranks 10th with US$488 billion worth of assets under management (AUM). Temasek is in the 24th position, with US$215 billion worth of AUM.

Separately, the report also highlighted the technology sector as "industry of the year" for 2020, with a fifth of the investments carried out last year in technology, media and telecommunications (TMT).

"SOIs are looking to gain exposure to the potentially high returns derived from technological change. During 2020, Covid-19 hastened this rapid transition and boosted technology and innovation private equity opportunities," said the report.

However, it noted that there was a sharp pivot away from fintech and towards information technology, as well as life sciences and biotech.

Temasek emerged as the top tech investor, deploying some US$2.3 billion into tech-related sectors, especially in e-commerce and life sciences. GIC was the second biggest direct investor at US$2.2 billion, leading SOI investment in data centres and cloud.

Global SWF also highlighted four main trends driving the change in tech investments:

• The infrastructure of the digital age;
• Artificial intelligence and educational technology;
• Allocation to life science and biotech companies driven by health and climate crises; and
• Fast-growing emerging markets in the e-commerce space, but with caution on fintech investments.

Over the next 10 years, the report noted that in terms of investment activity, funds are expected to continue the trend of the past 12 years "and keep allocating more capital into alternatives over the next decade", adding that private equity and debt "will be the most popular choices, with the possibility of SOIs becoming direct lenders".

However, Global SWF also noted: "Regardless of the success of the ongoing global vaccine campaign, we expect Covid-19 will cast a long shadow. SOIs will be forced to continue pouring money into their domestic economies, via withdrawals or investments."