GIC increases exposure to private equity

The Singapore sovereign wealth fund looks to alternative assets, including real estate, private equity and infrastructure to mitigate against further losses after a tumultuous year saw its portfolio shrink by more than one fifth.

The Government of Singapore Investment Corporation (GIC) increased its exposure to private equity by 3 percent for the year to 31 March 2009, as part of a wider push to increase its alternative assets under management.

In its Report on the Management of the Government's Portfolio for the Year 2008/2009, the $200 billion state fund said its overall portfolio had shrunk by more than a fifth during that time, but that it had recovered more than half of the losses incurred during the previous year. In all, GIC's portfolio shrank by more than 20 percent in the year to March.

To mitigate against further potential losses, GIC said it had lifted its exposure to alternative assets, inlcuding real estate, private equity and infrastructure, from 23 percent in the year up to March 2008 to 30 percent in the year up to 31 March 2009. As part of this increase, GIC lifted its exposure to private equity from 8 percent to 11 percent and to real estate from 10 percent to 12 percent.

GIC said it had reduced its investments in public equities by more than 10 percent from July 2007 to September 2008 due to concerns of overvaluation in the sector. But, it said it would favour investments in emerging markets such as those in Asia, going forward.
“Global economic growth will be higher in the emerging than the developed economies. The developed economies will undergo further deleveraging while the emerging economies will be compelled to engender domestic demand,” said Ng Kok Sag, chief investment officer at GIC.

GIC Special Investments, the private equity arm of the sovereign fund, has invested in a variety of global, regional and country-focused private equity funds. Managers it has backed include TPG, The Carlyle Group, Hellman & Friedman, The Blackstone Group, Bain Capital, KKR, Providence, Silver Lake, BC Partners, Permira, CVC, Sequoia Capital, Sigma Partners, Affinity Equity Partners, Ironbridge Capital and Avenue Asia.