Asia-based LPs take ‘prudent approach’ post-Brexit

GIC is prepared for a ‘period of heightened market uncertainty’ and calls for markets to remain open in light of Britain’s impending departure from the EU.

The mood after Brexit is one of economic and political concern, yet limited partners based in Asia tell Private Equity International that their long-term approach to investing and highly diversified portfolios will persist through the uncertainty.

Singaporean sovereign wealth fund GIC has a wide range of investments in the United Kingdom, both in the form of direct equity investments and fund interests. Of its over $100 billion portfolio, 7 percent or approximately $7 billion is invested in the UK.

In 2013, it invested $1.3 billion in a UK property fund managed by Laxfield Capital. It owns a 17.5 percent stake in Bluewater shopping centre in Kent and is a shareholder of RAC, the second largest road assistance provider across the UK. Last year, it had also paid £1.1 billion to acquire 33 percent of the combined business of telecom operators Three and O2 UK from Hutchison Whampoa.

When asked about the UK’s vote to leave the European Union, Lim Chow Kiat, deputy president and group chief investment officer at GIC said: “GIC runs a long-term and diversified portfolio. We are prepared for a period of heightened market uncertainty. What's most important to us is that markets remain open.”

Meanwhile, a spokesperson from La Caisse de dépôt et placement du Québec (CDPQ) told PEI that the fund will “analyse the situation in depth and follow developments closely”.

“For now, we will continue to take a prudent approach. We are obviously not immune to the consequences of such an event,” the spokesperson said. “It is too early to fully measure an event as important and complex as this one will have on global markets.”

CDPQ was one of the investors which financed Three’s acquisition of O2. In March last year, it partnered with Hermes Infrastructure to buy the UK government’s 40 percent stake in high speed rail service Eurostar International for £585.1 million.

CDPQ is a Canadian private equity investor with over $248 billion of assets. As at 31 December 2015, close to 14 percent of its overall exposure was in the UK and Europe, amounting to $35 billion.

Two other significant Asia-based institutional investors – the Korea Investment Corporation and Temasek Holdings – declined to comment on Brexit.