The government of Singapore has built up a 3 per cent stake in British Land, the FTSE 100 property group that has seen its market value dive with the rest of the UK property sector.
The holding is worth £135m based on its current market price, a fraction of what it would have been worth this time a year ago. Since then worries have mounted about the slowing of the UK commercial property market. The company admitted last November that its portfolio had absorbed heavy losses due to the correction in the market. As of yesterday's close the company was worth £4.4bn, about half of what is was last January and less than a third of its £16bn portfolio.
For the buyer, Singapore's government-owned fund called GIC, the deal is the latest in a string of buys struck by the country as it seeks to diversify its bulging cash reserves with investments abroad.
Last month, the country's other sovereign wealth fund, Temasek, agreed to bail out Merrill Lynch by buying $5bn worth of shares in the group after it was hobbled by bad bets on products backed by US mortgages. That deal came just days after GIC agreed to put up about $9.5bn for a stake in UBS, which had been similarly struck down by America's subprime loans crisis.
The increased activity of sovereign wealth funds in recent months has led Western politicians to express concerns that government-owned bodies could take controlling interests in key domestic industries. Switzerland's economy minister became the latest European official yesterday to call for the introduction of a code of conduct for the funds in the wake of GIC's support of UBS.
The Chancellor, Alistair Darling, has joined finance ministers of other G7 nations in calls for greater transparency of SWFs, but said that they are broadly welcome in the UK and that the Government would not retreat into protectionism.Reuse content