Co-investments by state-owned investors are common, but Abu Dhabi’s ADIA and Singapore’s GIC seem to enjoy something of a special relationship. They have co-invested for the fourth time this year, backing one of the one of the biggest leveraged buyouts of all time.

The two sovereign wealth funds are investing alongside a consortium of Blackstone, H+F and Carlyle for control of Medline, the US’s largest private manufacturer and distributor of medical supplies valued at US$30 billion.

The Medline transaction mirrors a previous healthcare-focused buyout, back in 2017. Subsidiaries of GIC and ADIA bought minority stakes in Pharmaceutical Product Development from H+F and Carlyle, valuing the pharmaceutical company at more than US$9 billion.

Is this a sign of a close partnership, or simply convergence? There is indeed a pattern emerging in co-investments in chunky private equity transactions. These co-investments are often alongside many other institutional investors, including Canadian public pension funds. Yet, on occasions the two funds have collaborated closely, signalling close communication where interests align.

India is a long-standing geographical target in their co-investments. Last year, GIC and ADIA each invested US$750 million in Reliance Retail, an arm of Mukesh Ambani’s Reliance industrial conglomerate, alongside other institutional investors. Their Indian co-investments go back some years with both funds joining forces in 2016 to invest in renewables generation company Greenko Energy, which saw GIC take a 60% stake and ADIA 15%, making the Abu Dhabi fund the junior partner.

In other cases, the funds are simply joining a flock of funds, notably in major IPOs. In March, they were anchor investors in the IPO for Indian gaming firm Nazara Technologies, investing a total of US$4.8 million. Both were also cornerstone investors in Chinese short-video platform Kuaishou Technology’s US$5.4 billion IPO in January.

Alignment is also seen in their participation in consortia. Both GIC and ADIA take advantage of the relationships they have as backers of the same world-leading buyout firms and join in on deals. In April, the duo were limited partners in a Blackstone-led consortium that took control of Indian IT outsourcing services provider Mphasis. Over in Europe, ADIA and GIC were part of a consortium that took control of Netherlands-based fleet management and driver mobility company Leaseplan in 2016.  They were also included in a group of investors that acquired a third of Hutchison Whampoa’s British mobile phone business for US$4.3 billion.

With a strong track-record in venture capital, GIC is often looked up to as an assiduous trend-setter, particularly in venture capital. ADIA’s creation of its “Science Lab”, drawing on high-skilled researchers and developers, is a move towards developing more radical innovations that might disrupt institutional investment management – a trend towards involving AI and machine learning in decision-making that was started by GIC in 2017. Yet, the move indicates the Abu Dhabi fund is not simply shadowing GIC, but rather seeking to develop its own strategy and in-house methodology to boost returns that have been, in recent years, disappointing.