No longer to be ignored sovereign wealth funds seem to be popping up in the WSJ as often as Ipod advertisements and pink slips for CEOs. These are pools of fully discretionary capital that are controlled by the government an often times nothing more than a small financial committee of close political allies to the president or leader of the respective nation where the funds are based. Many of these funds range in the tens to hundreds of billions of dollars and some have estimated that this pool of capital will grow from $3 trillion to over $12 trillion by 2012.
Many of these sovereign wealth funds have made headlines by taking large long-term positions in western companies such as Citigroup. Below are some of the recent transactions involving hedge funds and banks who invest in hedge funds:
- UBS sold a 9% stake to the Government of Singapore Investment Corporation and another $1.77B stake to a undisclosed investor from the Middle East
- Abu Dhabi Investment Authority the sovereign fund of the Gulf Arab state acquired a 4.9% state in Citigroup for $7.5B
- Central Hujin Investment Co. acquired 71% of China Everbright Bank for $2.7B
- Dubai International Capital, ran by Dubai’s ruler Sheikh Mohammed bin Rashid Al Moktoum acquired 9.9% stake in Och-Ziff Capital Management Group for $1.1B
- China’s Citic Securities and Bear Stearns agree to invest $1B in each other and run a 50/50 JV in Hong Kong
- Abu Dhabi-based Mubadala Development Co. of the Abu Dhabi government regime paid $1.35B for a 7.5% stake in Carlyle Group
- Dubai International Capital took a 2.87% in ICICI Bank of India for $750M
- China state investment company paid $3B for a 10% stake in Blackstone
- Dubai International Capital bought an undisclosed stake in HSBC Holdings
Richard Wilson is a hedge fund consultant, founder of the Hedge Fund Group (HFG) and runs the Hedge Fund Consultants Blog.
