AUSTRALIA

The largest pension manager in Australia plans to more than double its allocation to private equity, using new offices in London and New York to hunt for global deals.

Private equity will rise to about 10% of AustralianSuper’s assets over the next few years, up from the current 4% to 5%, said the firm’s head of equities, Innes McKeand. The switch is part of a broader push for more of its A$165 billion ($113 billion) to be invested in assets outside of its home country and increase the percentage of money managed in-house.

AustralianSuper also reported that its ‘balanced’ option delivered an average annual return of 9.6%  in the 10 years to July 31, according to the SuperRatings SR50 Balanced (60-76) Index, making it the highest returning fund over that time frame.

Source: Bloomberg, Rate City

Australia's A$162.2 billion ($111.24 billion) sovereign wealth fund is considering lifting its exposure to private markets such as venture capital to benefit from the growth of innovative companies, but warns finding value in current market conditions is challenging.

The Future Fund's  deputy chief investment officer Wendy Norris told the Australian Investment Conference on September 11 that private equity investments were an increasingly important part of portfolio construction in an age of "growing private markets on the one hand and shrinking public markets on the other".

Norris told the conference crowd that the the Future Fund had A$25 billion in private equity investment at June 30 and 16% of its total investments were placed in this asset class. It has returned more than 10% a year over the past decade, while its annual return was 11.5% per cent over the past 12 months.

Source: Sydney Morning Herald

Superannuation fund Cbus is seeking to lift its infrastructure exposure by A$1 billion ($685.74 million) to offset lower returns from cash and fixed income products.

Diane Callebaut, head of infrastructure with Cbus, told an industry event in Canberra: “We are putting to our investment committee a proposal to increase the infrastructure asset class allocation to 13%, which equates to investing approximately an additional $1bn into infrastructure in Australia and overseas.”

As at the end of July, infrastructure accounted for 11% the A$50 billion fund’s total assets.

Source: IPE Real Assets

Sam Sicilia, chief investment officer of A$43 billion ($29.48 billion) super fund Hostplus hit back at climate change activists for pressuring institutional investors to sell off fossil-fuel assets, declaring that divesting shares of coal miners "achieves nothing".

Sicilia said fighting investors to sell out of fossil fuels was a "waste of time" and that persuading governments to take direct action was a much better option. "Divestment from coal shares does not exclude coal companies from impacting climate change... someone will still own the coal shares," he said.

Source: Sydney Morning Herald

Australian pension funds are sitting on a A$245 billion ($167.4 billion) ‘wall of money’ that will probably flow overseas because of a lack of domestic options, asset managers say.

The country’s superannuation funds represent the world’s third-largest pool of retirement assets, worth about $1.9 trillion. The Australian stock market is worth about $1 trillion.

The nearly 2:1 ratio is the highest among major developed economies, according to Bank of America Merrill Lynch. And the imbalance is growing – as is the range of overseas markets and assets attracting those funds.

Source: Reuters

CHINA

Mirae Asset Global Investments agreed to acquire a portfolio of 15 US luxury hotels from Anbang Insurance Group. The deal would be the biggest cross-border real estate investment by a South Korean company.

The portfolio, which Anbang purchased from Blackstone in 2016, consists of market-leading luxury hotels and resorts located in high barrier-to-entry urban and resort markets, with limited supply growth. It is positioned to benefit from the approximate $400 million in capital expenditures that Anbang has invested since 2016.

Source: Mirae Asset Global Investments

The State-owned Assets Supervision and Administration Commission (Sasac) of the State Council will make an one-off transfer of its 10% equity interest in China National Travel Service Group Corporation (China CTS) to the National Council for Social Security Fund, according to a regulatory filing of China CTS’s subsidiary China Travel International Investment Hong Kong.

After completion of the share transfer, Sasac and the Social Security Fund will be interested in 90% and 10%, respectively, of the equity interest of China CTS.

Source: China Travel International Investment Hong Kong

Chinese outbound direct investment (ODI) fell 9.6% to $143.04 billion in 2018, amid growing curbs on money leaving the country, the country’s Ministry of Commerce (Mofcom) has announced.

This was the second consecutive annual drop in China’s ODI after many years of breakneck growth. In 2017, ODI fell by 19.3%, the first decline on record. With Washington tightening restrictions on Chinese acquisitions of US assets, it seems likely that a large portion of the decline was US-centric.

Still, China remains the world’s second largest overseas investor, second only to Japan, as global foreign direct investment dipped by 29%, Mofcom said.

Source: South China Morning Post

INDIA

Warburg Pincus sold the remainder if its 2.7% stake in general insurer ICICI Lombard General Insurance for about $194.5 million.

The private equity firm invested in the insurer in 2017 ahead of its initial public offering, and had started divesting last year.

Source: Live Mint

JAPAN

GPIF has announced that it will introduce the "Index Posting System”, a mechanism for accepting ideas for indices that may potentially be selected as new benchmarks on an ongoing basis in the annual plan for this fiscal year.

The Index Posting System will be phased in by requesting information for a small number of indices during October 2019. It will fully launch in April 2020 after the necessary IT infrastructure has been developed.

During the pilot phase, GPIF will be requesting information on indices for ESG indexes for non-Japanese equities, diversity index for non-Japanese equities and green bond index for Japanese and/or non-Japanese fixed income. GPIF will request information on other indices such as traditional market cap indices or smart beta indices once the IT infrastructure has been fully established.

Source: GPIF

KOREA

Teachers’ Pension reaped 8.5% return in the first half of 2019, according to the latest data. In particular, overseas stocks and bonds, which TP invested in via third-party funds, jumped 11.3% and 19.3% in value, respectively, for Korea’s second-largest pension fund, with W16.7 trillion ($14.1 billion) in assets under management.

The Government Employees Pension Service, Korea’s third-largest with W9.7 trillion in assets under management, recorded a 24.1% return from foreign stock holdings. Combined with a 11.9% gain from overseas bonds, the entire portfolio returned 6.4% overall.

Both pension funds saw losses in 2018 amid bearish a stock market. The yearly loss of the Teachers’ Pension and Government Employees Pension Service came to 2.5% and 1.7%, respectively.

Source: The Korea Herald

The Public Officials Benefit Association (Poba) plans to commit $250 million to five private debt funds focusing on mid-cap companies in North America and Asia. Poba will receive proposals by September 26.

It will select four US-focused debt funds and one Asia-focused fund and commit $50 million apiece, according to investment banking sources. The committed capital will be invested in senior-secured loans through direct lending, Poba said in a request for proposal posted last week.

Poba did not disclose how much capital to commit to those funds. Proposals need to be submitted via a brokerage company and to include the name of a Korean management company which the applicants want to work with for the mandate.

Source: Korean Investors

MALAYSIA

Khazanah-owned Malaysia Airlines could be bought by Japan Airlines. The Malaysian sovereign wealth fund has hired Morgan Stanley to review potential options for the airline.

Khazanah could not be reached for comments for the story outside of working hours.

High level talks have taken place for Japan Airlines to purchase a stake in the Malaysian national carrier as the two countries have forged close ties.

Source: FMT News

Khazanah has received a $480 million (MYR2 billion) offer from Indonesia’s Astra Infra and Canada Pension Plan Investment Board for its stake in an Indonesian toll-road operator, according to an anonymous source.

The operator, PT Lintas Marga Sedaya, holds a 117-kilometre toll road connecting Jakarta to Cirebon in the western part of Java island, the person said, adding that the Malaysian sovereign wealth fund will meet on Friday (September 20) to discuss the offer.

Source: FMT News

SINGAPORE

Temasek’s Vertex Growth Fund has exceeded its fundraising target of $250 million as it closed the fund at $290 million.

The sovereign investor’s venture capital arm aims to back startups “emerging from the strong early-stage portfolio across the Vertex network,” said James Lee, the fund’s managing director, in a statement. It has secured commitments from investors in the region, including Cathay Life Insurance.

Source: Bloomberg, Strait Times

A GIC-led consortium has paid $500 million for a minority stake in a Vietnam-baed retail unit of Vingroup JSC, according to a statement from the Singapore sovereign wealth fund on September 9.

VCM Services and Trading Development Joint Stock Company was set up by Vingroup recently to oversee the operations of its supermarket and convenience store chains.

"As a long-term investor, GIC is confident in the growth outlook for disposable incomes and household consumption in Vietnam," said a spokesperson. 

Source: Strait Times

TAIWAN

The Financial Supervisory Commission is considering new rules that could raise the cost of investing in bond exchange-traded funds (ETFs) for insurance companies. A Fubon Life Insurance spokesperson said the changes would raise the combined risk charges on bond ETFs to close to 15%, much higher than the current 8.1%. 

The regulator plans to change the way the risk-capital charge for insurance firms’ investments in bond ETFs is calculated by the end of this month. One of the measures will include an additional currency-risk capital charge of 6.61% on bond ETFs that track foreign assets but are denominated in Taiwan dollars.

Another proposal under consideration would see a new single-risk ratio of 6.33% charged for ETFs tracking developed-market bonds, and 8.35% for emerging-markets bonds.

Source: Bloomberg

ASIA

The Asian Infrastructure Investment Bank (AIIB) and Amundi, Europe’s largest asset manager, announced a $500-million Asia climate bond portfolio which aims to accelerate climate action in the multilateral bank’s members and address the underdevelopment of the climate bond market.

Through a managed fixed income portfolio of an initial $500-million, the joint project expects to mobilise another $500-million from climate change-focused institutional investors. A portion of the investment proceeds will be allocated to market education, engagement and issuer support.

Source: AIIB

GLOBAL

The insurance and reinsurance industry possesses the necessary data, risk knowledge and expertise needed to enable vital infrastructure investment across the world’s emerging markets such as Indonesia, Cambodia and Myanmar, Swiss Re says.

There are opportunities to unlock infrastructure projects for investment by promoting standardisation and transparency through a common disclosure framework to establish a tradable infrastructure asset class, said Gregory Schiffer, the reinsurer's global head of trade and infrastructure, property and specialty underwriting.

Source: Reinsurance News