GIC invests $549m in US energy firm

The Government of Singapore Investment Corporation (GIC) has bought an 11 per cent stake in United States-based energy infrastructure firm AEI for US$400 million (S$549.2 million).

The investment followed a recent foray into the lucrative sector by another Singapore investment company, Temasek Holdings, and came as oil traded at unprecedented prices.

GIC said yesterday it met AEI late last year when the American firm was seeking to raise capital.

A spokesman said GIC ’sees it as an opportunity to make a substantial investment in AEI until the American firm achieves a stock exchange listing’.

He added that the investment would help GIC gain exposure to the growing energy infrastructure markets of the developing world, the focus of AEI’s business.

GIC Special Investments, GIC’s private equity arm, purchased the shares from AEI and some of its shareholders.

Mr George Kay, vice-president of GIC Special Investments’ London-based global infrastructure group, has been appointed to AEI’s board.

Privately-held AEI owns energy infrastructure businesses in several emerging markets, including China, Mexico and Argentina. Its revenues last year exceeded US$3.2 billion.

Temasek recently set up a unit to invest in energy exploration and development.

GIC, Host Hotels in property venture

By Chua Hian Hou, ST

The Government of Singapore Investment Corporation (GIC) has teamed up with a New York-listed real estate investment trust to invest up to US$2 billion (S$2.8 billion) in Asian and Australian property.

The Singapore firm’s real estate arm and Host Hotels & Resorts, one of the world’s largest owners of luxury hotels, have set up a joint venture with an initial investment of up to US$600 million. This, combined with anticipated leverage, will provide total investment potential of at least US$1.5 billion.

Host, which will provide fund management services to the venture, will own a 25 per cent stake while GIC will hold the remaining 75 per cent.

GIC Real Estate president Seek Ngee Huat said the combination of ‘Host’s core skills in hospitality investment and asset management, and GIC’s regional presence and network’ would serve the venture well.

This places it in a good position to ‘build up a substantial portfolio of hospitality related assets in Asia’.

GIC Real Estate, one of the world’s top 10 real estate investment firms, has a multi-billion-dollar portfolio in more than 200 property-related investments across 30 countries, according to the statement announcing the venture.

Last month, GIC reportedly paid about 80 billion yen (S$1.1 billion) for the 438-room Westin Tokyo hotel, and in January, it announced a joint venture to develop a residential township near Moscow.

GIC buying $2.1b stake in Benetton family’s holding firm

By Jessica Cheam, ST

The Government of Singapore Investment Corporation (GIC) is investing 1 billion euros (S$2.14 billion) in an Italian firm run by the famous Benetton fashion family.

The GIC’s private equity unit, GIC Special Investments, will initially hold 3 per cent of Sintonia, with the stake increasing to 14.3 per cent after a financial restructuring.

This will comprise an initial investment of 150 million euros, which will rise to 1 billion euros in total after a capital increase by Sintonia, GIC spokesman Jennifer Lewis told The Straits Times.

Luxembourg-based Sintonia is the Benetton family’s privately run vehicle for infrastructure investments and does not hold shares in the United Colors of Benetton fashion brand.

But it does run highway manager Atlantia, which manages the most extensive highway network in Europe, and has a stake in Telco, the holding company that controls Telecom Italia, Italy’s largest phone group.

The story of the investment first surfaced in Italian daily La Stampa, which said yesterday that a deal was slated to be signed in Luxembourg.

According to Reuters, the deal is expected to be closed in the second quarter of this year.

The family’s empire is controlled by Mr Luciano Benetton and his three siblings. It is best known for the global fashion brand and the sometimes controversial advertising it employs.

Forbes magazine ranked Mr Benetton 323rd in its list of the world’s billionaires last year, estimating his fortune at US$2.8 billion (S$3.9 billion).

The family also owns the retail group Edizione Holding, which controls the Milan-listed Benetton Group, and Sintonia. Together, they have a combined revenue of 9 billion euros.

GS Infrastructure Partners, a Goldman Sachs fund, will also hold a 14.3 per cent stake in the restructured Sintonia.

News of the deal came a day after a private British firm, Orchard Street Investment Management, said it had teamed up with the GIC to create a £300 million (S$840 million) fund to invest in British commercial real estate.

In recent months, the GIC has pumped billions into troubled financial giants in the wake of the US subprime crisis, investing $9.82 billion in Citigroup in January and $14 billion in UBS in December.

Singapore’s other sovereign wealth fund, Temasek Holdings, also bought a stake in a US investment bank, pumping $6.4 billion into Merrill Lynch.

GIC Special Investments has bought stakes in infrastructure-related firms before. In 2002, it teamed up with Keppel Corp’s venture fund unit k1 ventures to buy a stake in US-based Prime Co Wireless for US$14.2 million.

And in 2000, it paid $15 million for a 16 per cent stake in Australian-listed EasyCall International, an internet network infrastructure services company.

The GIC, which manages Singapore’s foreign reserves, manages a portfolio worth over $100 billion, but its exact size is unknown.

UBS shareholders approve GIC’s $14b capital injection

By Grace Ng, ST

UBS shareholders approved last night an 11 billion Swiss franc (S$14.16 billion) injection by the Government of Singapore Investment Corp (GIC) into the Swiss banking giant following a tempestuous marathon meeting.

Those who attended the emergency meeting in Basel, Switzerland, fumed over the billions of dollars UBS lost as a result of its exposure to the United States sub-prime mortgage crisis.

But seven tense hours after the meeting started at 5pm Singapore time, some 6,500 shareholders present voted overwhelmingly in favour of the proposed capital injection totalling 13 billion Swiss francs by GIC and a Middle Eastern investor.

About 599 million votes were in favour, far exceeding a two-thirds majority of 458 million votes needed for the proposal to pass.

They also approved the bank’s proposal to replace a cash dividend with a share dividend, allowing the bank to raise 4.4 billion Swiss francs and fortify its balance sheet.

Many shareholders arrived at the meeting on a train called the UBS Special, put on especially for the event.

Before the vote, livid shareholders castigated UBS chairman Marcel Ospel over the bank’s hefty 20 billion Swiss francs’ worth of charges related to investments in US sub-prime mortgages.

The write-downs dealt UBS its first full-year loss in over a decade.

One furious shareholder even tried to storm the stage, where the UBS board was seated, The Associated Press reported.

‘I think it would be better if the whole board would be replaced and that their pensions be withdrawn,’ said an angry Swiss shareholder.

Another said: ‘A bank is not a casino. You’ve placed high bets and you’ve lost a lot.’

The meeting at St Jakob’s Hall, a sports arena and concert hall in Basel, started 15 minutes late, ‘contradicting Switzerland’s reputation for rigorous punctuality’, to accommodate ‘extra numbers in two overspill halls’, reported the Financial Times.

Mr Ospel kicked off the meeting with an impassioned plea to shareholders to back injections of 11 billion Swiss francs from GIC and another two billion Swiss francs from an unidentified Middle Eastern investor.

Some shareholders, such as Swiss groups Actares and pension fund Profond, earlier called for a rejection of capital infusion, saying it was unfair that they could not participate in the convertible bond issue. They instead sought a rights issue.

Mr Ospel insisted the capital infusion was ‘absolutely necessary’ to help UBS get back on its feet.

He also turned down calls for his resignation, saying he would not ‘thoughtlessly relinquish” his duties.

The current crisis is the most difficult since the 1929 market crash, and UBS ‘judged certain markets wrongly’, said Mr Ospel.

‘We subsequently noticed this error, but due to the rapid evolution of events were unable to react in time,’ he said.

Still, Mr Ospel, 58, who helped push a merger that created UBS 10 years ago, said it was his ’supreme duty’ as co-architect of UBS to ’stay on the front lines’ and ensure the bank ‘gets back on the road to success’.

He also said UBS was looking for senior bankers to join its board.

UBS is reportedly having difficulties finding anyone willing – or brave enough – to take the hot seat Mr Ospel has occupied for seven years.

More than 50 shareholders rose to speak – limited to five minutes each.

Some shareholders expressed fears that UBS could face further hefty write-downs this year.

Mr Ospel told shareholders: ‘I fully understand, and we’re likely to hear it often today, that you are extremely disappointed by what has happened.’