Banks on Sale- Say Hi to Sovereign Wealth Funds

(for details pls visit www.OptionPundit.net)

In case you have not yet accustomed to Sovereign Wealth Funds (SWF in short), get used to it. In the coming decade they will be a major force to reckon with and the ones who are going to influence a lot of decision making process which in one way or other will have impact on your investment portfolio.

Here is a list of latest transactions by SWF, originally published by AP on Yahoo:

  • Dec. 10, 2007: UBS AG (UBS) announces that the Government of Singapore Investment Corp., a sovereign-wealth fund, is investing $9.75 billion for a 9 percent stake in the Swiss banking giant, while an undisclosed strategic investor in the Middle East is contributing $1.77 billion in UBS AG.
  • Nov. 26, 2007: Abu Dhabi Investment Authority, the sovereign investment fund of the Gulf Arab state, acquires a 4.9 percent stake in Citigroup Inc. (C), the largest U.S. bank, for $7.5 billion.
  • Nov. 7, 2007: Central Huijin Investment Co., China’s largest state-owned investment arm, acquires 71 percent of China’s joint-stock China Everbright Bank for $2.7 billion.
  • Oct. 29, 2007: Dubai International Capital, owned by Dubai-ruler Sheikh Mohammed bin Rashid Al Maktoum, acquires 9.9 percent outstanding equity stake in Och-Ziff Capital Management Group, a U.S.-based hedge fund, for more than $1.1 billion. Och-Ziff goes public in November on the New York Stock Exchange.
  • Oct. 22, 2007: China’s government-controlled Citic Securities Co. and U.S. investment bank Bear Stearns Cos.(BSC) agree to invest $1 billion in each other for minority stakes that could be expanded. They will also operate a 50-50 joint venture in Hong Kong to offer capital markets services across Asia.
  • Sept. 20, 2007: The Qatar Investment Authority, Qatar’s sovereign investment fund, acquires a 20 percent stake in the London Stock Exchange and nearly 10 percent of Nordic bourse operator OMX AB.
  • Sept. 20, 2007: Abu Dhabi-based Mubadala Development Co., an investment arm of the Abu Dhabi government, buys a 7.5 percent stake of the management operations of one of the world’s largest private-equity firms, Carlyle Group, for $1.35 billion.
  • July 23, 2007: China Development Bank, a Chinese state agency, agrees to pay $3 billion for a 3.1 percent stake in British bank Barclays PLC, and Temasek Holdings, a sovereign wealth fund in Singapore, agrees to pay $2 billion for a 1.77 percent stake in Barclays.
  • July 13, 2007: Dubai International Capital purchases a 2.87 percent stake in one of India’s largest banks, ICICI Bank Ltd. (IBN), for $750 million.
  • May 20, 2007: China’s state investment company agrees to pay $3 billion for a 10 percent stake in U.S. private equity firm Blackstone Group LP (BX). The Chinese investment company agreed to buy nonvoting shares in Blackstone concurrent with Blackstone’s initial public offering.
  • May 2, 2007: Dubai International Capital buys an undisclosed stake in British bank HSBC Holdings PLC (HBC).

Bottomline – SWF are on shopping spree and currently banks are on sale. Soon the companies with “real” assets and sound business model will see funds flowing in. Why- a) why should someone sell his assets to for the paper that can be created overnight aka US$ and b) no one likes to keep a depreciating asset specially when few % points means billions.

Welcome SWFs, I am looking forward to your entry as it makes investments “Highly Certain and Less Volatile”.

Profitable trading, OP


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8 responses to “Banks on Sale- Say Hi to Sovereign Wealth Funds”

  1. Wai Ling Avatar

    This is a great insight to Sovereign Wealth Funds. Many thanks for the info!

  2. chiu Avatar
    chiu

    Just how big is the SWF ?!

    Based a Straits Time Article, the following are some of the world biggest funds :

    1) Abu Dhabi S$1328B
    2) China State Investment S$304B
    3) Russian Stabilization Fund S$193B
    4) Temasek Holding S$164B
    5) GIC S$150B

    So Abu Dhabi fund is rich enough to buy half of Citigroup. Now GIC has purchase a stake in UBS, what will be the next, let see, it will be the above list.

  3. […] earlier mentioned that Sovereign Wealth Funds (SWF) are going to shape the next decade and Banks are the first ones on sale. Come recession, quality Dow companies will be on next sale […]

  4. OptionPundit Avatar

    So the list now consists of MER, UBS, MS, C, BSC, HBC,BX, IBN

  5. […] close the door before it hits the fan”. Markets are holding quite well despite all the news. SWFs are making waves (right or wrong). The only certainty I am seeing is in Gold, Agriculture and Oil (or alternate […]

  6. […] There are still more to come so enjoy the ride. I just hope that these stalwarts doesn’t take SWFs down with them else that will trigger another round of […]

  7. […] not going on shopping spree yet. If you were to look for quality names, I suggest you head over to my previous post, where I have been collecting all the names SWFs have been investing. These are the companies which […]

  8. […] is offering a hefty 31% discount to raise $15.6Billions. Sorry SWFs. You may turn out to be smart in future but not anytime soon. It’s going to be very rough […]

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