Sovereign funds new anchors for IPOs

These are among the top 10 anchor investors in big IPOs this year

What’s common between the IPOs of Eris Lifesciences, ICICI Lombard, SBI Life Insurance and Security & Intelligence Services (India) is The Abu Dhabi Investment Authority (ADIA) was the common anchor investor in all these IPOs, which were also some of the biggest issues this year.

ADIA is not alone. Sovereign wealth funds and pension funds have emerged as the top anchor investors in Initial Public Offerings (IPOs) this year. 

Take top 10 IPOs by size this year (see table), three to four out of top 10 anchor investors in these issues were sovereign wealth funds such as ADIA, GIC or pension funds such as CPPIB.

In the SBI Life Insurance IPO,  top 10 anchor investors included pension fund CPPIB, Aranda Investments (a fully-owned subsidiary of Temasek Holdings), Government of Singapore, FIL Investments (formerly Fidelity) and ADIA.

Top anchor investors in the Avenue Supermarts (D-Mart) IPO included private equity investors and sovereign wealth funds such as Acacia Banyan Partners, FIL Investments (Mauritius) Ltd (Fidelity), General Atlantic Singapore Fund, Goldman Sachs India Fund Ltd, Government of Singapore (managed by GIC), among others.

‘‘Sovereign and pension funds have managed to balance their portfolio with listed stocks. However these are still a small part of their overall exposure to India,’’ says Sanjeev Krishan, leader, private equity, PwC India. 

With time, pension funds and sovereign wealth funds have evolved their strategy in India, says Vikram Uttam Singh, co-head, Alvarez & Marsal. They first came in as investors in private equity firms, observed, and then started investing directly in private and public markets, and have now set up local offices. CPPIB recently set up an Indian office.

For some sovereign wealth funds such as Temasek, GIC or ADIA, India has always been a key territory. ‘‘Multiple teams focus on India including infra funds and direct investments,’’ says Krishan. 

ADIA recently committed to investing $1billion in the National Investment and Infrastructure Fund (NIIF), marking the start of India’s ambitious attempt to raise equity funds for the infrastructure sector.