Ireland’s SWF eyes more Asia investment tie-ups
The Irish sovereign wealth fund, a keen co-investor alongside fund managers and other asset owners, may establish more partnerships in Asia to add to its burgeoning tie-up with China Investment Corporation (CIC).
“We’ve developed good relationships with CIC, and we’re thinking about other areas of collaboration, but we’re in the early stages of that,” said Eugene O’Callaghan, director of the Ireland Strategic Investment Fund (ISIF).
He was speaking to AsianInvestor on the sidelines of an event in London hosted by the International Forum of Sovereign Wealth Funds (IFSWF) last week to the launch of its latest annual review.
ISIF, with €8.9 billion ($9.9 billion) under management, is open to partnerships with other sovereign funds in Asia, but does not have anything else in the pipeline in the region as yet. Such moves would be for the fund's next stage of development, added O'Callaghan, and would most likely not happen for a year or more.
In any case, ISIF has been kept busy lately across a range of activities. O'Callaghan cited as an example its collaboration with the International Finance Corporation, part of the World Bank, to create growth opportunities for Irish companies in emerging markets. The partnership was announced in October 2018, with an initial focus on the food sector.
CHINA TECH A "SWEET SPOT"
ISIF is also in touch with other leading Asian government investors, such as Singapore's GIC and Temasek; they are highly regarded global dealmakers in technology and various other sectors.
“We’d obviously be open to any ideas,” O’Callaghan added. “But [the] China-Ireland [fund] is a unique opportunity for us, because China is such a massive market, and China’s adoption of technology has been fantastic. That's been a sweet spot for ISIF.”
China has demonstrated a pioneering approach to technology in various segments; for instance, its population has been remarkably quick to adopt mobile e-payment.
Indeed, ISIF led a round of series-C funding in November for Wuxi Nextcode, a Chinese genomic information company. The Irish fund provided $70 million of the $200 million raised, and was joined by Temasek, Jack Ma’s Yunfeng Capital and US venture firm Sequoia Capital.
Such consortia are increasingly common. SWFs have been building allocations to unlisted assets and shifting towards co-investing at a rapid pace in the past few years, according to the IFSWF review released last week. But this evolution is also sparking concerns about the level of debt that state investors are taking on to fund such deals.
CIC COLLABORATION SUCCESS
For ISIF, further tie-ups in Asia might well look similar to its growing partnership with CIC, which fits with both funds' mandates to help domestic companies expand overseas.
ISIF started working with China’s near-$1 trillion state fund in 2013 by setting up a $100 million fund to invest in information and communications technology. It must have paid off: in March last year the two institutions established the second China-Ireland growth technology fund, this time to jointly invest €150 million.
The new vehicle will again be co-managed by Dublin-based Atlantic Bridge and Beijing-based WestSummit Capital, but will place a stronger focus on targeting Chinese companies who wish to use Ireland as a base to access the European market, and continuing to invest in Irish companies with a strategic interest in accessing China.
However, establishing a similar tie-up in India seems a less likely prospect for ISIF for the time being.
What made the CIC partnership possible, O’Callaghan said, was that it is a public fund yet one that is 100% commercial in how it approaches opportunities. “India doesn’t have any similar institutions really,” he noted. “It’s about what’s feasible and practical for us.”