Insto roundup: Aussie supers boost foreign assets; SWFs push into India

Australian superannuation funds are increasing foreign assets; six bidders vie for Anbang Insurance's luxury hotel portfolio; GIC raises property ties to India's DLF and Tata Group; Japan lifers hope the dollar will weaken; NPS eyes Singapore property stake; Nippon Life buys 35% of Myanmar insurer, and more.
Insto roundup: Aussie supers boost foreign assets; SWFs push into India


The largest Asian asset owners have shown a large change in their awareness and uptake of environmental, social and governance (ESG) investing in the past three to five years, with governance emerging as the most important ESG factor for most institutions, according to new research.

As in other regions, ESG investing began with a negative screening approach, found a whitepaper released last week by the Economist Intelligence Unit. While the method is still used, the dominant ESG approaches are now engagement and, in particular, integration. 

However, interviewees cited concerns about: thin and poor-quality data preventing informed investment decisions; a fragmentary regulatory environment across the region; and a dragging perception in the broader market that ESG was about values (or ethics) rather than financial value (or returns).

Source: Economist Intelligence Unit


Australian superannuation funds Cbus and QIC are eyeing bigger overseas allocations, with the latter institution looking at Chinese securities in particular.

Kristian Fok, chief investment officer of Cbus, said the A$47 billion ($33 billion) fund would move to a 50/50 split between local and offshore investments within five years. It has a 58%/42% local/offshore split now.

Meanwhile, QIC’s director of investments, Allison Hill, said the fund was looking at Chinese corporate bonds and planned to seek an onshore partner given the nuances of the legal system and the need for transparent credit analysis. This comes after it took “a material tilt towards China” a few years ago.

Source: Investment Magazine

AustralianSuper, the country’s biggest pension scheme, plans to increase the portion of its portfolio invested in unlisted assets to around 30% from 20% over the next three years, its investment chief told Reuters.

Moreover, with a portfolio of A$160 billion ($110 billion), the fund expects total assets to nearly double in the next five years as Australians are forced to save more under the country’s compulsory retirement scheme.

Overseas markets are likely to grab the bulk of the increased investment in private assets, chief investment officer and deputy chief executive Mark Delaney said, tapping around half to two-thirds of the likely A$16 billion to A$20 billion in new money.

Source: Reuters

Hostplus has increased its commitment to venture capital to A$1.3 billion ($900 million) as it added an A$181 million investment in Boston-based Safar Partners. The US firm is said to be well connected with the laboratories of Massachusetts Institute of Technology (MIT), Harvard University and University of Rochester.

The A$44 billion superannuation fund will be seeding the fund to back scientific ideas across the three universities. 

Source: Australian Financial Review

The growth option of Australian superannuation funds is set to return 7% for the financial year as they recover from the market slump in December last year.

While the average growth fund has returned 9% for the past nine years, Mano Mohankumar, researcher at Chant West said that the return rate this year “won’t reach the levels we’ve seen in some recent years, but it’s important to keep things in perspective".

Source: The New Daily

US insurer MetLife has appointed Chesne Stafford as chief customer and marketing officer and Stafford will be succeeded as chief distribution officer by Michael Mulholland. The latter was executive general manager of growth, advice and marketing at Sunsuper.

The two appointments follow the arrival at MetLife of new chief executive Richard Nunn at the start of May. Previously CEO of Statewide Super, he replaced Deanne Steward, who left MetLife last August to join First State Super.

Source: MetLife


Six investors are bidding for the luxury hotel portfolio owned by China's Anbang Insurance, with bids ranging from about $5.5 billion to $5.8 billion. US private equity giant Blackstone, Canada's Brookfield Asset Management and Korea's Mirae Asset Management are among the bidders. The number of bidders is down from nearly 20 to have expressed interest in the portfolio.

The portfolio includes 15 high-end properties, among them Essex House Hotel overlooking Manhattan’s Central Park and the Four Seasons Hotel in Wyoming.

Anbang was seized by China's insurance regulator in February 2018 over illegal operations "which may seriously endanger its solvency capability". The takeover is scheduled to end in February next year.

Source: Wall Street Journal


Singapore sovereign wealth fund GIC is strengthening its alliance with India’s largest listed property developer, DLF, to build India’s biggest retail mall, according to people with direct knowledge of the matter.

The mall with more than 2.5 million square feet of retail space will be a mixed-use development in the north Indian city of Gurgaon. The development will be executed by a GIC-DLF venture formed in late 2017.

The retail mall will be part of a 8 million square feet project that will also contain serviced apartments, a five-star hotel and commercial property. The project will be developed in two to three phases over more than five years, said one of the sources.

Source: The Economic Times

Six private equity funds, including PremjiInvest, Carlyle, ChrysCapital and GIC, have been shortlisted to buy a 26% stake in India's SBI General Insurance for roughly $500 million dollars, according to sources.

The stake sale by Insurance Australia Group will value SBI General Insurance at about $1.73 billion, the sources said. Goldman Sachs is running the stake sale and a deal will be announced shortly.

Source: The Economic Times

India’s Tata Group is planning to launch about a dozen hotels in the next three years through its partnership with Singapore sovereign wealth fund GIC, the head of the Indian group’s hotel unit said.

Indian Hotels, a Tata unit, last month said it was setting up a three-year, $575.6 million investment platform with GIC to buy hotels in the luxury, upper upscale and upscale segments in India.

These hotels would be owned by special-purpose vehicles, to be funded equally with debt and equity. The local company would put in 30% equity, with GIC committing the remaining 70%.

Source: The Economic Times, DealStreetAsia


Japan's Tokio Marine Insurance aims to raise its overseas insurance business profit ratio to nearly 50% this year, with emerging markets including Thailand as the main contributors. The company's life insurance premiums in Thailand are expected to reach this year's target of Bt7.41 billion ($241.72 million) or an 11% increase from last year.

Business diversification, tech adoption to restructure business and building a core identity to strengthen management are the three strategies to help the company achieve the overseas profit target, said Noboru Yamagata, first vice-president of Tokio Marine Holdings.

Source: Bangkok Post

Japan’s life insurers are holding out for the possibility that the Federal Reserve’s first rate cut in more than a decade will afford them better levels at which to be buying the US dollar.

The dramatic shift in the outlook on US monetary policy has not persuaded the insurers – among the biggest players in the Japanese currency market – to materially change their stance on dollar purchases, but some are starting to nibble in.

Five top Japanese life insurers Reuters spoke to in the past week say they were ready to increase their exposure to dollars if the US currency falls to near ¥100, about 7.5% cheaper than where it was on June 24. The insurers believe the yen may not rise beyond that psychologically important barrier.

Source: Reuters


Investors in South Korean entertainment agency YG Entertainment, including the National Pension Service, have suffered losses of around W200 billion ($169.2 million) over the past six months, according to Korea Exchange data. Broken down, NPS lost around W20 billion, while some 20,000 minority shareholders lost about W182 billion between them.

On June 18, scandal-ridden YG’s share price closed at a low of W28,300. Since peaking at W48,950 on December 26 last year, prices have plunged, wiping out W65 billion of the Kosdaq-listed company’s stock value.

On June 14, YG founder Yang Hyun-suk and his brother Yang Min-suk, who was chief executive officer, stepped down following allegations that yet another YG artist used drugs. Some saw this as a move that could restore investor confidence, but others argued that it was a loss of corporate value.

Source: The Korea Herald

Korea's National Pension Service is expected to take a stake in the real estate asset Frasers Tower in Singapore. A deal is expected to value the entire property at close to S$2 billion ($1.48 billion), or around S$2,900 per square foot of net lettable area. 

Frasers Tower, which stands on a 99-year leasehold site, has 32 office floors starting at Level 5. There is also an adjacent three-storey cascading retail podium with a roof garden and a three-storey basement car park.

Source: The Business Times

National Pension Service (NPS) signed a memorandum of understanding on mutual cooperation around exchange of information with the Social Security Board of Sri Lanka (SSB) on June 18.

In the future, the two institutions will exchange information related to the operation of the pension system, share their experience in operating the system through personnel exchanges, and strengthen cooperation systems such as education, training and joint research, an NPS official said.

Source: Korea IT Times

Korean institutional investors are scrambling to introduce the stewardship code which requires them to implement their fiduciary duties. A total of 97 asset management firms, private equity funds and securities firms adopted the stewardship code as of June 13, according to the data from the Korea Corporate Governance Service.

The figure increased from 18 in 2017 to 75 at the end of 2018. This year, 22 more companies have joined and 33 more firms are set to follow suit. 

The rush to introduce the stewardship code has been led by pension funds, which are big investors in the domestic market. The National Pension Service has already adopted the code, and other major pension funds have announced plans to do so this year.

Source: Business Korea


Malaysia may be looking at setting up a national health insurance scheme to boost funds to deliver better healthcare along with looking at partnering with private enterprises.

Health minister Dzulkefly Ahmad announced in late March the setting up of a seven-member Health Advisory Council to look into public-private partnership initiatives to meet Malaysia’s healthcare needs.

The federal allocation for the Health Ministry has gone up from MYR14.76 billion ($3.56 billion) in 2010 to MYR26.53 billion in 2018, representing a 49% increase after discounting for inflation. But the costs of treatment have soared faster than that.

Source: The Star

Italian insurer Generali will have to decide soon what it will do with its 49% stake in Malaysian joint venture MPI Generali Insurans, as it has a put option on the holding that will be exercisable from May next year.

The put option is exercisable at any time within six months of the expiry of five years from the date of completion of the acquisition. It allows Generali Asia to sell to MPHB Capital its entire 49% stake in MPI, subject to certain conditions. MPHB Capital owns the other 51%.

Any further disposal or acquisition of a stake in MPI would require Bank Negara Malaysia’s consent.

Source: The Edge


Japan's Nippon Life Insurance is buying a 35% stake in Myanmar's Guardian Life Insurance for $21 million, subject to approval by the country's regulator.

The Japanese life insurer expects to complete the transaction between September and October with the venture being renamed to Grand Guardian Nippon Life.

The government opened up the insurance sector in January, allowing for an up to 35% stake in local ventures. Local private firms were allowed to enter the insurance industry in 2013 after nearly half a century of state-backed Myanmar Insurance's monopoly.

Source: Nippon Life, NNA Business News


Philippine president Rodrigo Duterte has named Ricardo "Dick" Morales as president and chief executive of the Philippine Health Insurance Corp.

Duterte had sought to remove acting president and CEO Roy Ferrer and PhilHealth board members following a scandal where payments were made to a dialysis center for treatment of already dead patients.

Morales has experience heading the Armed Forces and Police Mutual Benefit Association, which provides insurance plans, security, and financial products for armed forces and their families. He was once a part of the group of rebellious military officers that sought to oust Ferdinand Marcos.



Singapore’s life insurance premiums are seen to be growing by close to 5% in 2020 as annual premium products grow, according to a report from rating agency Standard & Poor's.

Aside from annual premium products, other drivers include moderate demand for single premium policies and benefits from improved pricing sufficiency of integrated health plans.

According to the report, life insurance premiums in Singapore averaged about 5.6% of GDP over the past five years. It added that the industry is thriving thanks to an established regulatory landscape that has implemented a regular review process since 2004.

Source: Insurance Business Asia


Tokio Marine Holdings will merge two of its major businesses in Thailand, with Tokio Marine Insurance Thailand and Safety Insurance combining to create Tokio Marine Safety Insurance. 

The merger is expected to complete in early 2020, and will be subject to the approval of the regulator there. The new entity aims to become one of Thailand’s leading insurers with a GWP target of Bt21.7 billion ($690 million) and a net profit of Bt1.1 billion in the next three years.

Source: InsuranceBusinessAsia


Sovereign wealth funds are piling into India, buying stakes in everything from airports to renewable energy, attracted by political stability, a growing middle class and reforms making it more enticing for foreigners to invest.

Sovereign wealth and pension funds are expanding their horizons to private markets, to complement an existing focus on stocks and bonds.

“Almost every jurisdiction in the western world is raising the bar for entry for foreign investors, but in India it’s the other way round,” said Tihir Sarkar, London-based partner at US law firm Cleary Gottlieb, which counts several prominent sovereign funds as clients.

Source: Deal Street Asia

For Ryan Bailey, head of investments at Children’s Health, the largest investment opportunities on the horizon are China A-shares

The Chinese stock market “is 85% retail and is receiving a good deal of stimulus”, said Bailey, who oversees the Dallas, Texas-based pediatric healthcare provider’s $1.8 billion in foundation and pension assets. “In addition, value relative to growth is attractive, since the dispersion between the two is at one of its highest levels.”

He added in an interview that one of his most important strategic allocations was the one he made to A-shares and China venture capital. “It is the second-largest economy in the world, but it is underrepresented in world market cap,” Bailey said.

Source: Chief Investment Officer


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