Alternatives news roundup: Asia Pacific's alternatives market to hit $6tr by 2025; Indonesia's SWF to buy troubled toll roads
ASIA PACIFIC
The alternative investment market in Asia is set to experience explosive growth in the coming years, with private capital assets under management (AUM) on course to reach $6 trillion by 2025, according to alternative asset data provider Preqin in its first Asia Pacific-focused report.
It noted that private capital is playing an increasing role in asset allocations across Asia-Pacific, with regional private capital assets under management having expanded almost sixfold over the past decade to reach $1.71 trillion as of September 2020 and $133 billion raised during 2020 alone. Combined with the $156 billion in Asia-Pacific hedge funds as of the fourth quarter of 2020, the region is fast approaching the $2 trillion milestone for alternatives.
Source: Preqin
AUSTRALIA
Private capital assets under management in Australia rose to $77 billion at June 2020, an 8.4% increase from $71 billion at the end of December 2019, according to new data from Preqin and the Australian Investment Council.
The figure includes assets in private equity, venture capital, infrastructure, real estate, natural resources and private debt funds, and marks a 148% rise in the amount of money housed in Aussie-focused private capital funds over the past decade.
As usual, a lot of the heavy lifting was done by private equity firms, which snared $4.3 billion in freshly-minted pineapples in 2020 – about 2.8 times the total raised in 2019. That amount was raised via seven new funds, including Pacific Equity Partners’ $2.5 billion sixth fund – which closed in July – and Quadrant Private Equity's $1.2 billion seventh fund – which was finalised in December.
Source: Australian Financial Review
Washington H Soul Pattinson said on Tuesday (June 22) it will buy Milton Corp to create a near A$11 billion ($8.29 billion) investment firm to broaden its exposure to other asset classes, including alternative assets.
WHSP, an 118-year old investment house, expects the deal to create a larger war chest to tap new asset classes, including expanding private equity and direct credit investments, and tap global equities.
Milton currently manages around A$3.7 billion in assets, mostly Australian equities.
CHINA
Chinese authorities have introduced a new rule that limits cash management products' use of leverage and from holding riskier securities. The rule is the latest in a slew of measures authorities have released in recent weeks to manage risks in the financial system.
These measures include restricting state firms' overseas commodities exposure, encouraging domestic banks to hold more foreign currencies, banning searches for crypto exchanges and preventing bullish equity-index targets.
Experts said these moves threaten to undermine Chinese President Xi Jinping’s pledge to give markets greater freedom.
Source: Bloomberg
China’s Silk Road Fund and Hassana Investment, controlled by the Saudi Arabian government, joined a group investing $12.4 billion in Saudi Aramco’s oil pipelines. The consortium, led by US firm EIG Global Energy Partners, has now closed a deal to acquire a 49% equity stake in Aramco Oil Pipelines.
The group includes Abu Dhabi sovereign wealth fund Mubadala Investment and Samsung Asset Management. Abu Dhabi is the capital of the United Arab Emirates and, along with Saudi Arabia, a key member of the Organization of Petroleum Exporting Countries cartel.
The subsidiary will have rights to 25 years of tariff payments for oil transported through Aramco’s crude pipeline network. Aramco, the world’s biggest oil producer, will retain ownership of the other 51% of the shares.
Source: Bloomberg
INDONESIA
Indonesia’s newly established sovereign wealth fund, Indonesia Investment Authority (INA), said it plans to acquire several toll road assets from troubled state infrastructure developers.
INA chief executive Ridha Wirakusumah said the fund was looking to acquire assets belonging to Waskita Karya, Hutama Karya, Wijaya Karya and Adhi Karya, as well as state-owned toll road operator Jasa Marga to allow them to pay their debt and free up capital for further toll road development.
Wirakusumah was speaking at a webinar held by the Indonesian Banking Development Institute in June.
Source: Jakarta Post
KOREA
An anticipated regulatory change in South Korea will bolster growth of the burgeoning private equity industry led by large and reputable fund managers, a report by alternatives data provider Preqin showed on Sunday (June 20).
The revision of the Capital Markets Act, soon to be in effect starting October, aims to separate institutional funds and noninstitutional funds. It is largely aimed at protecting noninstitutional end-investors of private funds, as a number of misselling scandals had dented the fund industry over the past couple of years.
Those overseeing institutional funds will be able to provide the extended pool of investment structures and terms to institutional investors and target companies, according to Preqin. "If all investors in a fund are institutions, the manager can use different investment structures to meet the diverse capital needs of potential portfolio companies,” Chai Jin-ho, executive managing partner at STIC Investments, said in the report.
Source: Korean Herald
Korean institutional investors, including the Public Officials Benefit Association (Poba) and Yellow Umbrella Mutual Aid Fund, emerged as the largest group of liquidity providers under the US Federal Reserve’s Term Asset-Backed Securities Loan Facility (TALF) programme introduced in 2020.
To utilise the funding facility, New York-based EMP Belstar had raised $580 million from nine Korean institutions last year, based on which it borrowed $2.6 billion from the Fed to buy US asset-backed securities (ABS), according to the US investment firm on June 17.
Source: The Korea Economic Daily
The Korean Teachers' Credit Union has committed $100 million to Chicago-based Harrison Street Real Estate Capital's new flagship fund that is aiming to raise $1.5 billion to invest in life science, healthcare service and senior housing facilities, according to a local newspaper report.
A number of Korean financial services companies look set to make a similar amount of commitment to the US investment firm's eighth flagship fund, the Maeil Business Newspaper reported last week.
Source: The Korea Economic Daily; Maeil Business Newspaper
Korean Venture Investment Company (KVIC), a South Korea government-backed fund of funds, has committed to invest in Abu Dhabi-based early-stage VC Shorooq Partners’ Bedaya Fund, the VC firm announced on Monday (June 21), saying that it is the first Middle Eastern fund to have received a commitment from KVIC since its inception in 2000.
Shorooq did not disclose the size of the investment, which is being made from KVIC’s foreign investment programme, which aims to provide capital to foreign VCs that can bring strategic value to the Korean venture ecosystem. The fund managers KVIC has invested in have a combined assets under management of $3 billion.
Source: Menabytes
SINGAPORE
Singapore sovereign wealth fund GIC’s joint venture with student accommodation group Unite acquired two London properties for £342 million ($472.4 million). They were acquired from the wider Unite group and bring the joint venture’s total portfolio to £1.68 billion.
The acquisition was financed with a £140 million loan from investment manager Barings on behalf of two undisclosed institutional investors.
Unite and GIC last month announced they would extend their long-running joint venture by 10 years to 2032.
Source: IPE Real Assets
Singaporean state-owned bank DBS announced on June 17 that it will be the anchor investor into a special situations private debt fund by Muzinich Asia Pacific, which is believed to mark the first anchor investment by a local bank in this space.
DBS will pump in up to $200 million or 40% of the total fund size, whichever is lower. It will also have representation on the fund's investment committee and advisory committee.
The investment into the private debt fund is in line with DBS’ strategy of investing in new revenue and growth opportunities arising from companies that may face temporary stress from the Covid-19 pandemic, but have a healthy core perceived to be worth investing in.