GIC alternative assets exposure decreases on valuation lags

GIC, the sovereign wealth fund of Singapore, said its exposure to alternative assets had dropped to 25 percent at March 31, 2010 from 30 percent a year earlier in its annual report published this week. The drop came as a result of lagging valuations in its real estate and private equity portfolios behind its public equity valuations.

Government of Singapore Investment Corporation saw its alternative assets exposure drop to 25 percent for the year to March 31, 2010 from 30 percent a year earlier, according to its latest annual report.

The sovereign wealth fund of Singapore reported that the value of its overall portfolio had increased in the financial year, in excess of inflation, to 3.8 percent, largely offsetting losses made the year before. Its average rate of return from its investments for the 20 years to 31 March rose to 7.1 percent, up 1.4 percent on its 20-year figure reported last year.

The major change in its portfolio allocation came in public equities which GIC grew to 51 percent from 38 percent – within that, there was a 13 percent rise in developed markets equities, reflecting improved valuations stemming from rebounding stock markets last year.

However while it said in its report it “continued to invest steadily and divest selectively” in alternative assets, valuations in its real estate and private equity portfolios lagging public equity valuations were responsible for its exposure to the asset group falling over the year.

Within GIC’s alternative assets, its real estate weighting decreased to nine percent from 12 percent, while its private equity, venture capital and infrastructure allocation dropped one percent to 10 percent from 11 percent. Natural resources also dropped by a percent to three percent. Its absolute return strategies remained constant at three percent.

Meanwhile GIC’s Asia logistics developer and management firm, Global Logisitcs Properties (GLP) has filed a proposal for an initial public offering, which if successful, could see it raise $2.7 billion – Singapore’s largest IPO for approximately 17 years.

Under the terms of the proposal, which would see GLP sell 1.173 billion shares at between S$1.78 to S$1.96 each and offer 588.98 million shares to existing investors, GIC would remain majority shareholder. GLP was acquired by GIC in 2008 from global logistics giant ProLogis.