GIC sells London property to Norway’s sovereign fund

SINGAPORE — The Republic’s sovereign fund GIC has sold a central London office property for £582.5 million (S$1.2 billion) to Norway’s sovereign fund, Norges Bank Investment Management.

The Bank of America Merrill Lynch Financial Centre (MLFC) is a 585,000 sqf office complex located at 2 King Edward Street in London, GIC said in a statement yesterday. The real estate is fully let to Bank of America Merrill Lynch, which will continue to manage the property under the terms of the lease.

GIC had acquired the asset from Merrill Lynch in 2007 for about £480 million, a joint statement from June 2007 showed. The statement then stated that MLFC would be “leased by Merrill Lynch for a term of 15 years with renewal rights extending significantly beyond the initial term”.

The divestment follows a series of investments by GIC in the United Kingdom this year.

Last week, Britain’s Sky News reported that GIC was part of a consortium including Spanish infrastructure firm Ferrovial and Australian bank Macquarie that is set to buy three British airports from Heathrow Airport Holdings (HAH) for about £1 billion. Quoting unidentified insiders, Sky News said the investors would take equity stakes in three airports — Aberdeen and Glasgow in Scotland and Southampton in southern England.

GIC, Ferrovial, Macquarie and HAH all declined to comment.

Late last month, GIC announced that it had bought a stake in Britain’s second-largest roadside recovery group, RAC, from United States private equity firm Carlyle Group.

GIC did not specify the size or price of the stake it had bought in RAC, but said it and Carlyle would jointly own a majority stake, with the company’s management holding the rest.

The RAC investment came only months after GIC had ploughed in £16.6 million into UK fuel cell manufacturer Intelligent Energy Holdings in June to add to its original US$63 million (S$80 million) investment.

“There has been a shift by sovereign wealth funds since 2009 to increase their asset allocation to private equity to boost returns, Mr Rajiv Biswas, the Singapore-based chief economist for the Asia-Pacific region at IHS, told Bloomberg last month.

“GIC has a long track record, spanning back to 1982, of investing in private equity,” Mr Biswas said. Private equity “is still a relatively new style of investing for many sovereign wealth funds, and more of them are likely to invest in this asset class in the future”, he added. Agencies