Guess Who Else Is Rushing to Cash In

Singer, Jason, Henny Sender, Jason Dean, Marcus Walker. 2007. “Governments Get Bolder in Buying Equity Stakes.” Wall Street Journal (24 July): p. A 1.

“Foreign governments, flush with cash and no longer content with the meager returns to be had on safe but low-yielding investments like Treasurys, are becoming increasingly aggressive players on the equity front. The new boldness of these government-controlled investors was on display Sunday night when entities controlled by the governments of China and Singapore agreed to invest as much as $18.5 billion in return for stakes in the big British bank Barclays PLC. In doing so, Chinese lender China Development Bank and Temasek Holdings Pte. Ltd., the Singapore government’s investment agency, could play a role in the outcome of the biggest bank-takeover battle ever. That increasingly bitter contest pits Barclays against a consortium of European banks led by Royal Bank of Scotland Group PLC in seeking to acquire Dutch banking giant ABN ABN Amro Holding NV.””

“In doing so, Chinese lender China Development Bank and Temasek Holdings Pte. Ltd., the Singapore government’s investment agency, could play a role in the outcome of the biggest bank-takeover battle ever. That increasingly bitter contest pits Barclays against a consortium of European banks led by Royal Bank of Scotland Group PLC in seeking to acquire Dutch banking giant ABN ABN Amro Holding NV. The Barclays deal is the latest in a string of investments in U.S. and European companies by governments in Asia and the Middle East. Temasek last year became the largest shareholder in London-based Standard Chartered PLC, a bank that has most of its assets in Asia. In May, the Chinese government invested $3 billion in Blackstone Group on the eve of the U.S. private-equity giant’s initial public stock offering. And last week, an investment fund controlled by the government of Qatar made a $21.8 billion takeover approach for British supermarket chain J Sainsbury PLC, one of the largest potential acquisitions ever by a state-owned fund.”

“China Development Bank plans to invest as much as $13.5 billion in Barclays, in what could become the largest overseas investment by a Chinese company to date. The planned investment is part of a broader deal that also includes as much as $4.97 billion in funding from Temasek, and would enable Barclays to buttress its bid for ABN Amro. Should Barclays succeed in acquiring the Dutch bank, the deal ultimately could leave China Development Bank with a stake of about 8% in the newly enlarged Barclays, making it by far the biggest shareholder.”

“Since 2002, such holdings have increased 20% a year, according to U.S. Treasury calculations, well ahead of the average 6% rate of 1997-2001. Global foreign-exchange reserves now stand at about $5.6 trillion. An additional $1.5 trillion to $2.5 trillion held by “sovereign wealth funds” brings total assets controlled by governments to “roughly $7.6 trillion,” or 15% of global gross domestic product, the Treasury says.”

“Sameer Al Ansari, executive chairman and chief executive officer of state-back investment firm Dubai International Capital, says he is scouring the world’s 500 largest publicly traded companies looking for a place to invest as much as $10 billion. His next target: a U.S. company that he has already identified but will only describe as “a household name.” Mr. Ansari says Dubai International, which has $6 billion under management, is hoping to announce the U.S deal in September. His company bought a major stake in London-based HSBC Holdings PLC earlier this year, and this month bought 3% of Airbus maker European Aeronautic Defence & Space Co. and 3% of India’s ICICI Bank Ltd.”

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