The first month of 2021 is turning out to be a bumper month for investment by state-owned investors with the volume and value of transactions set to rival the busiest months of 2020 - and potentially see the return of activity to pre-pandemic norms.
In the first two weeks of January, Global SWF notes that the value of deals is already more than 80% of the level reported in the previous January and around half the level recorded last month.
However, the acceleration of deals in recent days indicates that SOI activity could reach the highest level since Covid-19 struck the global economy, with January 13th alone seeing total deal value of US$1.85 billion. While day-to-day movements can vary wildly, the trend shows a rapid growth in activity, mirroring growth confidence that vaccination programs will tame the pandemic, ease lockdown and enable economies to rebuild from a once-in-a-century health crisis.
Among the deals struck on Wednesday, APG ramped up its stake in European regional train lessor Alpha Trains to 62% after acquiring a 20.9% slice from AMP Capital while Canadian public pension fund PSP Investments sold its stake to PGGM; Arcus continues to hold the remaining stake. The Dutch funds now dominate the shareholding of the owner of more than 800 mostly electric trains across 17 countries, giving them exposure to the clean energy transition in European rail.
Arjan Reinders, Head of Infrastructure at APG, said: "We have agreed this acquisition at a time of continued growth of the rail passenger and freight markets in Europe, and we believe that the ongoing liberalisation of the European market will drive further investment in the rail sectors. We have the ambition to contribute further to the success and growth of Alpha Trains in the long-term."
Erik van de Brake, Head of Infrastructure, PGGM said: “Alpha Trains is a valuable addition to the growing PGGM Infrastructure Fund. We expect the company to continue its strong performance and generate long-term stable revenues for the fund’s participants, including Pensioenfonds Zorg en Welzijn, who are working towards a more sustainable investment portfolio. This investment enables long-term pension capital to support the growing demand for sustainable ways of transport in Europe.’’
Other notable deals in a busy 24 hours include the announcement by Ivanhoé Cambridge, the real estate arm of Canadian pension fund CDPQ, of a US$400 million joint venture with Hong Kong's PAG for a Japanese last mile logistics property. In venture capital capacity activity, Alaska Permanent and Qatar Investment Authority participated in a US$230 million Series-B Tessera Therapeutics, an early-stage life sciences company specializing in gene writing.
Both life sciences and logistics property are increasingly popular among state-owned investors and January has been no exception, indicating the trend towards these segments is here to stay in long-term investor strategies.
