Sovereign wealth funds double deal volumes to $24.9 bln in Q3

Thu Oct 1, 2015 11:29am EDT
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By Claire Milhench

LONDON Oct 1 (Reuters) - Sovereign wealth funds spent a total of $24.9 billion on overseas acquisitions during the third quarter of 2015, almost double the previous quarter as they chased after trophy assets.

Thomson Reuters data shows that sovereign wealth funds, which invest windfall revenues from oil and other commodity exports for future generations, were involved in 28 deals during the July-September period, down 10 from the previous quarter.

Deal volumes are still shy of the $30.6 billion peak reached in the last quarter of 2014, when sovereign funds were buying up assets at their fastest rate since the financial crisis. But it marks a significant rebound from the first quarter when deal value slipped to $5.4 billion for 32 transactions.

The surge in deal value is partly attributable to the limited number of investment opportunities, especially in infrastructure, where some funds have struggled to hit their allocation targets.

Others have chased "trophy assets" to fill out their real estate portfolios. But competition is fierce for these Tier 1, headline-grabbing skyscrapers.

"There is so much capital in the market," said Joe Valente, head of research for European real estate at JP Morgan Asset Management.

"By and large these assets are fully priced, but that doesn't mean investors will stop buying them. There is such competition for stock, that is distorting the premium."