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GIC sees Australian real assets as a haven from bumpy markets

Bloomberg10/20/2022 01:47 PM GMT+08  • 2 min read
GIC sees Australian real assets as a haven from bumpy markets
GIC's CEO Lim Chow Kiat. Photo: Bloomberg
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Singaporean sovereign wealth fund GIC Pte. plans to invest more in Australia as a haven from inflation thanks to its energy production potential and low debt.

GIC sees Australia as an attractive destination, particularly for investments in the green energy transition and real estate, said Chief Executive Officer Lim Chow Kiat.

Australia is “more resilient than the average advanced economy and that’s a positive going into an era like this which is probably going to be a bit of a bumpy ride in the next couple of years,” he said in an interview Tuesday. “Especially in the era of climate change, we see very strong demand for a lot of the resources that Australia has.”

The Singapore sovereign fund officially opened its Sydney office this week to build on the more than 19 investments it’s made in the country since 2018, according to data compiled by Bloomberg. The new office has about 14 investment professionals.

The firm’s deals in Australia have included strategic partnerships with Macquarie Group Ltd. in 2014 to invest in student housing provider Iglu, and with Hong Kong logistics developer ESR Group Ltd. for Australia’s largest warehouse portfolio last year.

While real estate will remain a large part of the GIC’s exposure to the country -- especially in public markets where valuations have come off faster -- other asset classes, particularly energy infrastructure, are likely to form a larger part of dealmaking in the region, Lim said.

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In 2022, GIC made an equity investment in Australian green hydrogen producer ICE, which has projects in Western Australia as well as Oman and Saudi Arabia. GIC will likely do more in that space because it has an advantage when vast investments are required to fund breakthrough business models.

“GIC can help with growth capital because newer companies need to expand and in those areas scale is really important,” Lim said. “We’re very interested in hydrogen because the challenge there is to get to scale and we can already see the business model develop an offtake market.”

GIC, which doesn’t publish its assets under management, is estimated to be one of the world’s biggest sovereign wealth funds with about $690 billion, according to consulting and research companies Global SWF and SWFI.

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