GIC, Temasek help drive sovereign funds' M&A deals to $34b in Q3

LONDON • Sovereign wealth funds increased their merger and acquisition (M&A) activity to US$24.6 billion (S$34 billion) in the third quarter, propelled by deals involving Singapore's GIC and Temasek as well as China Investment Corp.

Such funds were involved in 49 announced deals, up from 46 with a total value of US$15.5 billion in the previous quarter, Refinitiv data showed.

The bumper second-quarter total was the highest since the US$35.8 billion hit in the same period last year.

The fourth quarter is also gearing up to be a bumper period for deals, with Abu Dhabi Investment Authority this month involved in a 10.2 billion Swiss franc (S$14.2 billion) deal to buy Nestle's Nestle Skin Health.

The largest deal during the third quarter involved GIC and Canada's Brookfield Asset Management agreeing to buy United States freight railway owner Genesee & Wyoming Inc in a deal valued at about US$8.7 billion including debt, according to Refinitiv data.

"This kind of business is stable and provides security in times of big uncertainty over returns and yields," said Mr Javier Capape, director of sovereign wealth research at IE Centre for the Governance of Change.

GIC also participated in taking private New York-listed Tallgrass Energy, alongside Blackstone Infrastructure Partners and Enagas.

The deal showed GIC's interest in exploring private assets, which fit better in long-term investment strategies, while also tapping opportunities in the US shale industry, said Mr Capape.

Despite uncertainty about Britain's planned exit from the European Union, several of the deals involved British assets.

Saudi Arabian sovereign wealth fund Public Investment Fund invested US$550 million in Babylon Healthcare Services, while Abu Dhabi Investment Authority agreed to take a 30 per cent stake in British home appliance care specialist Domestic & General.