March saw some mega deals and mega sales by sovereign wealth and public pension funds, with significant changes in public market positions as they seek protection from market volatility and high inflation.
Global SWF’s database has identified US$5.26 billion of divestments by state-owned investors, mostly in listed companies. The same investors deployed US$10.2 billion in investments, a high proportion of which was allocated to renewables infrastructure and decarbonization.
Canada’s biggest PPF, CPP Investments, cashed in major long-standing public equity stakes, generating US$341 million from divestment of NASDAQ-listed Enstar Group and US$482 million from France-based healthcare provider Orpea. It retained a position in Enstar with 9.4% of Enstar’s outstanding voting ordinary shares and CPPIB Epsilon Ontario Limited Partnership continues to hold a 4.6% stake, while it has totally exited Orpea. As a member of a Blackstone-led consortium alongside Singaporean sovereign wealth fund GIC, CPP sold shares in the London Stock Exchange Group (LSEG) as part of a GBP2 billion (US$2.4 billion) sale of a 5% stake.
Meanwhile, CPP made over US$3 billion of private market acquisitions, including US$1.75 billion in a co-investment with Silver Lake to make survey software-maker Qualtrics private. In the electricity sector, it partnered with IKAV to acquire Aera Energy, California’s second-largest oil and gas producer, with a view to supporting energy transition to renewables. In the same vein, CPP became the majority owner of India-based ReNew Energy Global by acquiring US$268.6 million worth of shares from Goldman Sachs.
Another Canadian fund, Ontario’s OTPP, completed the sale of an around 5.7% stake in listed Italian cosmetics manufacturer Intercos, reducing its shareholding to 10%, while ramping up investment in real assets. Its real estate subsidiary Cadillac Fairview acquired the residential division of Lincoln Residential, which is recognized as one of the largest private full service real estate companies in the US. This week, OTPP announced a strategic partnership with Sevana Bioenergy, acquiring a majority stake in the business and make a capital commitment of US$250 million to develop renewable natural gas projects across North America, utilizing organic waste.
GIC’s divestment from LSEG was dwarfed by its breathless pace of mega-deals with six transactions worth a total of US$3.73 billion. Like CPP, the Singaporean heavyweight ploughed capital into renewables, including ramping up its investment in another Indian solar and wind producer Greenko as well as snapping up a 5% stake in Spain-based EDP Renovaveis (EDPR) for US$1 billion, supporting the producer’s plans for pan-European growth in renewables and energy transition. GIC also combined forces with another Singaporean state-owned investor, Temasek, in the Brookfield-led take-over of the energy markets business of Australia’s Origin, backing a major push in renewables and storage to slash the country’s carbon footprint.
Other big divestments of long-standing assets were carried out by the Kuwait Investment Authority (KIA) and the Healthcare of Ontario Pension Plan (HOOPP). KIA announced it was cutting its holding in Mercedes-Benz from 6.84% to under 5% in a sale estimated at around EUR1.39 billion (US$1.5 billion).
HOOPP closed its sale of Champion Petfoods to Mars Petcare, a division of Mars Incorporated. It had held a majority stake in Champion since our initial investment in 2009. The company was previously valued at around US$2 billion, indicating that the sale generated a huge cash boost for the C$104 billion (US$76 billion) fund.
In a smaller, but strategic transaction, the Oman Investment Authority (OIA) announced that it will sell its 59.58% stake in the Oman Cement Company to China-based Huaxin Cement Company for US$193 million as the Sultanate’s SWF aimed to boost foreign investment in economic diversification.