URGENT response about Roundtable with the Chief Risk Officer of the GIC of Singapore
Antonio Rodriguez
The Government of Singapore Investment Corporation Private Limited (GIC)
Is a sovereign wealth fund established by the Government of Singapore in 1981 to manage Singapore's foreign reserves. Its mission is to preserve and enhance the international purchasing power of the reserves, with the aim to achieve good long-term returns above global inflation over the investment time horizon of 20 years. With a network of nine offices in key financial capitals around the world, GIC invests internationally in equities, fixed income, money-market instruments, real estate and special investments.
GIC is one of a few global firms with the highest corporate credit ratings by both Standard & Poor's and Moody's, of AAA and Aaa respectively. Its investment portfolio is managed by its three subsidiaries: GIC Asset Management Pte Ltd (public markets), GIC Real Estate Pte Ltd and GIC Special Investments Pte Ltd (private-equity investments). In 2008, The Economist reported that Morgan Stanleyhad estimated the fund's assets at US$330 billion, making it the world's third largest sovereign wealth fund.
In addition to GIC, the Government of Singapore owns another sovereign wealth fund, Temasek Holdings, which manages about US$142b of assets.
Investments
Traditionally, GIC has kept a low profile in its investments. During the subprime mortgage crisis of 2007-2010, however, a number of its investments attracted controversy.
In 2006, at the height of the US real estate bubble, it made a US$200 million investment in the equity of Stuyvesant Town—Peter Cooper Village, the largest apartment complex in Manhattan (as well as US$575 million in secondary loans). The management of the complex, Tishman Speyer Properties and BlackRock Realty, defaulted on their loan in 2010, effectively wiping out the investment.
In late 2007, during the first phase of the crisis, GIC invested $11 billion Swiss francs for a 7.9% stake in the Swiss bank UBS. The loans were converted into equity in 2010, with an estimated 70% loss of value, though partially offset by a 9% fixed coupon. GIC had acknowledged that the timing for the investment could have been better. It also stated that other investments made at that time have had positive returns which offset the losses on UBS. GIC's total portfolio has fully recovered to its value prior to the global financial crisis.
In 2008, GIC invested US$6.88bn for a 9% stake in Citigroup. In 2009, it pared its stake to less than 5%, realizing a $1.6 billion profit, with another $1.6 billion paper profit on its remaining holding.
As of 2011, GIC holds around 42% of its portfolio in North and South America, 28% in Europe and 27% in Asia.
Best,
Antonio