×

Where sovereign wealth funds are stashing their cash

The world's largest state-owned investment funds have been investing income from oil and gas reserves to financial markets to help diversify away from their reliance on commodities.

Real estate has become a favorite among some of the world's largest sovereign wealth funds such as Norway's Government Pension Fund Global (GPFG), which now has around $893 billion under management according to Sovereign Wealth Fund Institute and the Qatar Investment Authority, but funds are now increasingly eyeing alternative assets to provide new income streams and variety for their portfolios.

Here we take a look at where state-backed funds are putting their cash to work over the last few months.

Telecoms – O2 and Three mobile networks

Some of the world's largest sovereign wealth funds are thought to be in talks with mobile operator Three's parent company Hutchison Whampoa, to help provide financial backing for its planned takeover of Telefonica, which owns rival operator O2, according to reports earlier this month.

Sovereign wealth funds including China Investment Corporation, Singapore's Temasek and GIC, one of Qatar's government sponsored funds are in discussions to help finance the $15 billion merger. The winning investment fund is likely to become a large investor in the mobile operator with up to a third of the shares, according to reports.

A man works on the stand of mobile operator O2 at the CeBIT fair grounds in Hanover, Germany, in this March 6, 2006 photo.
David Hecker | AFP | Getty Images
A man works on the stand of mobile operator O2 at the CeBIT fair grounds in Hanover, Germany, in this March 6, 2006 photo.

Hotels

The Abu Dhabi Investment Authority (ADIA), the world's second largest sovereign wealth fund with $773 billion assets under management (AUM) according to SWFI has recently purchased a string of luxury boutique hotels from hotel group Marriott International.

Most recently, Marriot confirmed its sale of the Miami Beach Edition hotel for cash proceeds of $230 million to companies owned by the ADIA in mid-February. Before that the hotel chain sold the London Edition hotel to ADIA in January 2014 and is set to complete the sale of the upcoming New York Edition hotel at Madison Square Park in the first quarter of this year.

iStock | 360 | Getty Images


Skyscrapers

The world's largest sovereign wealth fund, Norway's GPFG bought a stake in a 40-story office tower in Manhattan earlier this month, in a deal that valued the building at $1.4 billion.

Norges Bank Investment Management, which acts on behalf of the GPFG snapped up a 45 percent stake in 11 Times Square for $ 401.9 million, the bank said in a statement.

The fund has been actively adding to its high-end retail portfolio in the last 6 months, as it beat several other bidders in London for Queensberry House, a 75,000 square-foot retail and office block agreeing to pay £190.6 million ($294.3 million).

Uber

Qatar Investment Authority (QIA) is reported to have invested in taxi hailing app Uber's most recent round of funding, along with a number of large hedge funds and a venture capital firm.

The startup raised $1.2 billion at the end of last year with the help of QIA, bringing to overall value of the firm to around $41 million, according to reports.