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GIC to hold on to Citigroup and UBS stakes: Tony Tan
http://www.straitstimes.com/STI/STIMEDIA/image/20110131/ST_IMAGES_GIC01.jpg
GOVERNMENT of Singapore Investment Corporation, the biggest investor in Citigroup and UBS, plans to hold its stakes in the banks for 'many years', and will consider selling only if there are attractive offers.
'We look to continue to hold on to our stakes in UBS and Citigroup for many years,' GIC deputy chairman Tony Tan said at the weekend in Davos, Switzerland, where he attended the World Economic Forum meeting. 'But one never says never; if someone offers an extremely high price, of course we'll look at the possibility.'
GIC bought stakes in New York-based Citigroup and UBS, Switzerland's biggest bank, three years ago, as the collapse in the United States subprime-mortgage market in 2007 froze credit markets and led to almost US$2 trillion in losses and writedowns at financial institutions.
Temasek Holdings, Singapore's investment company, sold its holdings in Bank of America and Barclays at losses following the financial crisis.
But GIC said in September that 'the worst is over' for the banks, prompting a longer-term view for its investment in these assets.
Citigroup and UBS have returned to profitability, have strong capital ratios, and will do well amid the changing regulatory environment, according to the sovereign fund, which manages more than US$100 billion (S$128 billion) of Singapore's reserves.
Paulson & Co, the US$35.9 billion hedge fund run by Mr John Paulson, told clients this month that it had made more than US$1 billion on its Citigroup investment in the past 18 months.
Citigroup, which surged 43 per cent last year, was the fund's most profitable bank holding for the year, Mr Paulson said in a letter.
Shares of UBS, which suffered the largest loss in Swiss corporate history in 2008 after bets on US mortgage-backed securities backfired, have more than doubled in price since March 9, 2009, when they reached an 18-year low amid the financial crisis. The stock has fallen 63 per cent since the start of 2008, shortly after GIC first announced its investment, while Citigroup lost 84 per cent.
GIC is the biggest shareholder in the two banks, holding 3.9 per cent of Citigroup and 6.5 per cent of UBS, according to data compiled by Bloomberg.
The US will be GIC's biggest area for investments for years, even as emerging markets grow faster, said Dr Tan.
'There is a major transfer of wealth from the developed countries to the developing countries in Asia,' he said. 'But it does not mean that for us in GIC, as an international investor, that we do not see opportunities, certainly in the US but even in Europe, because prices have gone so low.'
GIC, ranked the world's seventh-largest state investment firm by Sovereign Wealth Fund Institute, said last year it will keep increasing its investments in higher-growth emerging economies, especially in Asia, as expansion in developed nations slows.
Yesterday, Singapore-listed China developer Yanlord said it has teamed up with GIC's property arm, GIC Real Estate, to buy a prime residential site in Tianjin, China, for 1.16 billion yuan (S$226 million). The site in Jinnan District will provide 364,787 sq m of gross floor area.
Separately, the Financial Times reported yesterday that GIC and US private equity firm Bain Capital are close to buying a minority stake in India's largest motorcycle maker, Hero Honda, in a deal that could be worth up to US$1.75 billion.
GIC's holdings in the US fell to 36 per cent of its portfolio in the year ended March 31, from 38 per cent the previous year, according to its September annual report. The fund manages US$247.5 billion, based on the institute's estimates.
'The US still represents the single largest area of investment for GIC, even today, and I don't see that changing for many years to come,' said Dr Tan, who is a former deputy prime minister of Singapore.
GIC also bought some of the European debt issued to finance Ireland's bailout, he said, and the fund will consider buying more European rescue debt in future sales. 'We believe the bond is relatively safe given how it's structured and it gives us reasonable yield,' he said.
'The sovereign debt crisis in Europe is probably the single most pressing economic issue that faces the world today,' he said. 'We hope that European countries will be able to resolve the major structural problems; they've taken decisive steps but there are challenges ahead.'
GIC will consider selling more assets through initial public offerings, he said. 'At the moment we don't have any immediate plans to list them, but these assets are ready and will be well-received by the market should we choose to list,' Dr Tan said. He declined to name the assets.
GIC, which has been expanding its investments in Indonesia, is interested in putting its money into infrastructure projects in South-east Asia's largest economy, including a road from the city to the international airport, Dr Tan said.
'We see good potential there.'
BLOOMBERG, REUTERS
http://www.straitstimes.com/STI/STIMEDIA/image/20110131/ST_IMAGES_GIC01.jpg
GOVERNMENT of Singapore Investment Corporation, the biggest investor in Citigroup and UBS, plans to hold its stakes in the banks for 'many years', and will consider selling only if there are attractive offers.
'We look to continue to hold on to our stakes in UBS and Citigroup for many years,' GIC deputy chairman Tony Tan said at the weekend in Davos, Switzerland, where he attended the World Economic Forum meeting. 'But one never says never; if someone offers an extremely high price, of course we'll look at the possibility.'
GIC bought stakes in New York-based Citigroup and UBS, Switzerland's biggest bank, three years ago, as the collapse in the United States subprime-mortgage market in 2007 froze credit markets and led to almost US$2 trillion in losses and writedowns at financial institutions.
Temasek Holdings, Singapore's investment company, sold its holdings in Bank of America and Barclays at losses following the financial crisis.
But GIC said in September that 'the worst is over' for the banks, prompting a longer-term view for its investment in these assets.
Citigroup and UBS have returned to profitability, have strong capital ratios, and will do well amid the changing regulatory environment, according to the sovereign fund, which manages more than US$100 billion (S$128 billion) of Singapore's reserves.
Paulson & Co, the US$35.9 billion hedge fund run by Mr John Paulson, told clients this month that it had made more than US$1 billion on its Citigroup investment in the past 18 months.
Citigroup, which surged 43 per cent last year, was the fund's most profitable bank holding for the year, Mr Paulson said in a letter.
Shares of UBS, which suffered the largest loss in Swiss corporate history in 2008 after bets on US mortgage-backed securities backfired, have more than doubled in price since March 9, 2009, when they reached an 18-year low amid the financial crisis. The stock has fallen 63 per cent since the start of 2008, shortly after GIC first announced its investment, while Citigroup lost 84 per cent.
GIC is the biggest shareholder in the two banks, holding 3.9 per cent of Citigroup and 6.5 per cent of UBS, according to data compiled by Bloomberg.
The US will be GIC's biggest area for investments for years, even as emerging markets grow faster, said Dr Tan.
'There is a major transfer of wealth from the developed countries to the developing countries in Asia,' he said. 'But it does not mean that for us in GIC, as an international investor, that we do not see opportunities, certainly in the US but even in Europe, because prices have gone so low.'
GIC, ranked the world's seventh-largest state investment firm by Sovereign Wealth Fund Institute, said last year it will keep increasing its investments in higher-growth emerging economies, especially in Asia, as expansion in developed nations slows.
Yesterday, Singapore-listed China developer Yanlord said it has teamed up with GIC's property arm, GIC Real Estate, to buy a prime residential site in Tianjin, China, for 1.16 billion yuan (S$226 million). The site in Jinnan District will provide 364,787 sq m of gross floor area.
Separately, the Financial Times reported yesterday that GIC and US private equity firm Bain Capital are close to buying a minority stake in India's largest motorcycle maker, Hero Honda, in a deal that could be worth up to US$1.75 billion.
GIC's holdings in the US fell to 36 per cent of its portfolio in the year ended March 31, from 38 per cent the previous year, according to its September annual report. The fund manages US$247.5 billion, based on the institute's estimates.
'The US still represents the single largest area of investment for GIC, even today, and I don't see that changing for many years to come,' said Dr Tan, who is a former deputy prime minister of Singapore.
GIC also bought some of the European debt issued to finance Ireland's bailout, he said, and the fund will consider buying more European rescue debt in future sales. 'We believe the bond is relatively safe given how it's structured and it gives us reasonable yield,' he said.
'The sovereign debt crisis in Europe is probably the single most pressing economic issue that faces the world today,' he said. 'We hope that European countries will be able to resolve the major structural problems; they've taken decisive steps but there are challenges ahead.'
GIC will consider selling more assets through initial public offerings, he said. 'At the moment we don't have any immediate plans to list them, but these assets are ready and will be well-received by the market should we choose to list,' Dr Tan said. He declined to name the assets.
GIC, which has been expanding its investments in Indonesia, is interested in putting its money into infrastructure projects in South-east Asia's largest economy, including a road from the city to the international airport, Dr Tan said.
'We see good potential there.'
BLOOMBERG, REUTERS
