Alternatives news roundup: Asia's retail property appeal; Singapore plans carbon trading platform
ASIA
While retail property's appeal fell during the Covid-19 period, retail transactions in Asia Pacific rose 9% year on year, partly due to the reopening of economies and a sharp rebound in retail sales. Retail deals account for a larger share of the market than in other regions and were more frequent last quarter, along with hotel transactions.
There are several reasons for the investment case for retail real estate in Asia. First, Asian countries, including economies such as Australia and Japan, are undersupplied compared with the US and Canada. Even Europe has less stock per head because of stricter curbs on development.
Second, shopping centres are increasingly about providing a pleasant experience that lets people socialise, enjoy different types of entertainment and improve their health and well-being. These new value drivers are particularly important in Asia, where there is a fast-growing middle class and homes are among the smallest in the world
Source: South China Morning Post
AUSTRALIA
The Australian government has allocated A$15.2 billion ($11.9bn) for new infrastructure projects, according to its budget for 2021-2022. The new funding builds on its A$110 billion ($85.9 billion) 10-year infrastructure investment pipeline. It is reported that the money will create more than 30,000 jobs.
Among the funding, Queensland has been allocated around A$2 billion, West Australia has been promised A$1.6 billion, Victoria and South Australia have been promised A$3.4 billion respectively, while New South Wales will get A$3.8 billion. Lastly, Northern Territory, Tasmania and Australian Capital Territory have been promised A$401 million, A$377.2 million and A$186.2 million, respectively. Most of the investment will focus on road and rail projects.
Australian government launched its 10-year infrastructure investment programme in January, aiming to bust congestion, improve safety on roads and meet its national freight challenge.
Source: Pinsent Masons
Rest Super is understood to be considering options for its 50% in SEA Gas, which owns and operates a 700 kilometre underground high pressure natural gas pipeline and transmission system from Port Campbell in Victoria to Adelaide.
The superannuation fund is understood to have hired investment bank Lazard for help with the review, and has had its bankers quietly testing the appetite of potential buyers to see whether it get enough interest for an auction. Listed pipelines giant APA Group owns the other 50 per cent in SEA Gas and shapes as a potential acquirer.
A spokesman for Rest declined to comment on Monday (May 24).
Source: Australian Financial Review
CHINA
Chinese property developers face difficulties raising new off-balance sheet funds amid rising government and rating agency scrutiny, and may struggle to keep raising offshore private debt. The companies have often used so-called orphan special purpose vehicle structures to issue private debt. The issuer of the debt is not an affiliate or subsidiary of a company, so it will not appear on the companies’ balance sheet.
Such financing activities in the offshore market “peaked last year,” said Chen Yi, head of global capital markets at Haitong International Securities Group. “Developers have become more disciplined this year as rating agencies have been asking borrowers for more transparency on their off-balance sheet borrowing and so do the regulators.”
While off-balance sheet financing will disappear, though it will be used more sparingly and for more targeted activities. For instance China’s centralised land-bidding policy means developers need to amass large amounts of cash in a short period of time to win land.
Source: Bloomberg
INDONESIA
The Indonesia Investment Authority (INA) confirmed its first official foreign commitments for a toll-road investment vehicle.
Canada’s Caisse de Dépôt et Placement du Québec, the Netherlands’ APG Asset Management, and a subsidiary of the Abu Dhabi Investment Authority will each invest $1 billion in the new vehicle, while INA committed $750 million.
INA said the new vehicle would be “the consortium members’ primary vehicle for toll road investments in Indonesia”. It is expected to make its first investments within six months.
Source: Financial Times
KKR attracted a combined $400 million from the National Pension Service and Korea Post for its latest flagship fund that raised $18.5 billion at its final close. NPS has committed $300 million and Korea Post $100 million to KKR North America Fund XIII, according to investment banking sources on May 21. It is the US investment firm's largest buyout fund since its $17.6 billion fund launched in 2006.
Source: Korea Economic Daily
South Korea’s Industrial Accident Insurance Fund opened a tender for a W60 billion ($52.8 million) venture capital mandate, which will be split between two large and two smaller asset management firms. The large firms will receive W40 billion, and the two small and mid-sized firms will get W20 billion, the fund said in its request for proposal published on the website of the Korea Financial Investment Association on May 21.
Source: Asia Asset Management
SINGAPORE
Hyundai Investments, the wholly-owned investment arm of Hyundai Marine & Fire Insurance, on May 20 announced the closure of a new, W490 billion ($433 million) private fund dedicated to South Korea-focused acquisition financing for private equity clients.
The fresh fund, closed on May 18, is a second installment of its kind to invest in senior debt, following a W230 billion fund created in February 2020.
Source: The Investor
Temasek partnered DBS Bank, Singapore’s stock exchange and Standard Chartered to set up a carbon credit trading platform known as Climate Impact X (CIX).
CIX aims to provide better price transparency and verification of the quality of carbon credits and is targeting large businesses legally required to buy carbon credits to offset their emissions. It will also create a marketplace for companies wishing to invest in green projects. Temasek said CIX is in talks with global rating agencies to provide independent ratings to these projects.
The Monetary Authority of Singapore welcomed the initiative, which is under the industry group Alliances for Action (AfAs) and part of wider efforts to make Singapore a carbon services and trading hub.
Source: Business Times
The US’s largest sovereign wealth fund, Alaska Permanent Fund Corporation (APFC), committed $80 million to Asia-focused alternative investment funds in the first quarter of 2021.
This includes $50 million to two funds under Chinese private equity funds Boyu Capital; $14 million to Bain Middle Market Japan fund; and a $16 million co-investment in Singapore-based renewable energy developer Vena Energy.
APFC committed in total committed $309 to alternative vehicles globally between January and March 2021. Its current portfolio comprises 39% public equity, 21% fixed income, and 40% alternatives.
Source: DealStreetAsia