Insto roundup: BLF’s new $2b mandate; US pensions pour into Asian PE

Australia's Future Fund eyes more hedge fund exposure; China's insurance regulator says strong insurers could invest over 30% in equities; US pensions pour into Asia private equity; India's largest life insurer could conduct IPO; GIC to buy 30% of Myanmar bank; Taiwan's BLF invites bids for $2b absolute return mandate and more.
Insto roundup: BLF’s new $2b mandate; US pensions pour into Asian PE


Australia’s A$168 billion ($113 bilion) Future Fund is looking to add money to its A$22.6 billion hedge fund programme, where it can find managers with spare capacity, to help protect the portfolio against a sell-off in the equity market.

This comes as the sovereign wealth fund trimmed its holdings in Australian and developed market equities, private equity, property, debt and even alternatives in the final quarter of 2019, sending cash levels to the highest level in a year to free up capital to take advantage of a downturn, whilst also looking for uncorrelated returns in the stock market.

“Low interest rates are supporting risk assets, but assets are expensive by their own history, so we would expect forward looking returns to be lower than in the past,” chief investment officer Raphael Arndt said. “We don’t want to take on more equity risk but we are looking for equity-like returns… and the primary way we are doing this is through hedge funds.”



Insurers that have relatively higher solvency ratios and asset liability management capabilities are allowed to have their equity investment cap increase beyond 30%, said Cao Yu, vice chairman of the China Banking and Insurance Regulatory Commission, in a press briefing on how the financial sector can help amid the Wuhan coronavirus outbreak.

Raising the investment limit in equities could enable insurance capital to provide long-term funding for the development of the real economy and help to lower corporates’ leverage ratio, said Zhu Junsheng, a professor at the Development Research Centre of the State Council.

Source: The Paper


India’s largest lifer, Life Insurance Corporation of India (LIC), may be partially listed following the Modi government’s decision to divest a part of its stake in the firm.

LIC is currently fully owned by the government. Having set up in 1956, LIC controls a majority share of the life insurance market in India. Paring its stake in the insurance giant will help the government meet its divestment target, which has been increased to Rs2.1 trillion ($29.6 billion) in the financial year of 2021 compared to Rs1.05 trillion in the current fiscal year.

The government did not give a roadmap for listing LIC, but it said that Rs900 billion will be achieved via stake sales in state-owned banks and financial institutions.

Source: CNBC, Money Control


Indonesia has eased foreign investment restrictions for its insurance industry, with foreign entities now allowed to own more than 80% of shares in locally-listed insurers.

Joko Widodo

President Joko Widodo signed a decree on January 16 exempting foreign investors from the ownership cap if they can raise capital through an initial public offering in Indonesia. The new regulation also removes the requirement that the local partner must be a local entity wholly controlled by Indonesian citizens.

Foreign investors have long been calling for the lifting of the restriction, saying that it hampers them from injecting capital to expand, a Jakarta Globe report said, adding that local partners often lack the funds to keep their ownership proportional.

Source: Insurance Business Asia

State-owned enterprises minister Erick Thohir dismissed two directors of Asuransi Sosial Angkatan Bersenjata Republik Indonesia (Asabri) over alleged investment mismanagement at the social insurance firm.

According to a statement obtained on January 30, human capital and general affairs director Herman Hidayat and finance and investment director Rony Hanityo Apriyanto were dismissed. Asabri, which looks after insurance and pension funds for the military, police and defence ministry staff, was revealed to have invested in stocks allegedly used for pump-and-dump schemes. The alleged investment mismanagement cost the insurer around Rp10 trillion ($732.44 million) in losses.

Hidayat had been appointed as director on March 29, 2016 while Apriyanto had held his position since August 2 last year.

Source: The Jakarta Post


Shinhan Financial Group’s plans to merge Orange Life Insurance with its wholly owned life insurance unit seemed to have been working out smoothly. However, trouble persists as minority shareholders continue to demand an increase in their dividend payouts.

Small shareholders of Orange began making the demand after teaming up with civic activist group the Korea Stockholders Alliance in November, but Shinhan refuses, saying it would constitute a breach of trust with its other shareholders.

Source: The Korea Herald

Hana Financial Group's plan to acquire The-K Non-Life Insurance is likely to slow down due to differences over what is seen as a possible restructuring of the insurer.

The insurer's labour union held a press conference, Tuesday, claiming Hana plans to lay off hundreds of call centre employees and replace them with an outsourced service. The union said a clause that states management and labour reach a consensus before related decisions are made was deleted from a proposed agreement.

Source: Korea Times


Singapore’s sovereign wealth fund GIC will buy about 30% of Myanmar’s Yoma Bank alongside Norway Norfund for K130 billion ($89 million).

The lender already counts the World Bank's investment arm, International Finance Corp (IFC), among its shareholders. Once the transaction is complete, IFC will have an interest of around 4%, while GIC and Norfund will own 20% and 10% respectively.

Yoma Bank is one of Myanmar's largest lenders and was founded by local tycoon Serge Pun in 1993. It became the first bank in Myanmar last year with a foreign stakeholder following a decision by the IFC to convert a $5 million loan into a 5% equity shareholding.

Source: The Straits Times, Myanmar Times

Temasek and impact private equity fund ABC World Asia have committed $50 million in Sunseap Group, a Singapore-based solar energy firm.

Across the region, it has a total operating, under-construction and developmental asset project capacity of 1.7 gigawattpeak from projects in China, Taiwan, Japan, Vietnam and other parts of Southeast Asia.

The investment marks Temasek's ongoing bet on renewable energy. Earlier this month, it co-launched renewable energy platform O2 Power in India through a $500 million co-investment with Swedish asset manager EQT.

Source: The Straits Times, Finews


The Bureau of Labor Funds is inviting asset managers to bid for a five-year NT$64 billion ($2.1 billion) domestic absolute-return equity mandate.

The amount will be equally split among eight fund managers. The investment mandate is specifically for the Labor Pension Fund, Taiwan’s largest public retirement plan.

Interested fund managers should prove they can achieve an investment return of 200 basis points above the average year-end dividend yields of the stocks listed on the main board of the Taiwan Stock Exchange over the last five years. They should submit their bids before March 2.

Source: BLF


New York State Common Retirement Fund, with $210 billion under management, has revealed it committed a total of $505 million to Asia-focused private equity and opportunistic funds, including those managed by SSG Capital Partners and MBK Partners, in November.

Source: Deal Street Asia

Florida’s $209 billion state pension fund has invested $300 million into a private equity fund of funds managed by Hong Kong-based Asia Alternative Capital Partners in the last quarter of 2019.

The Florida State Board of Administration made over $4.7 billion across 19 commitments during those three months. Private equity and other private market fund allocations amounted to $2.3 billion of the total, across 14 managers.

Source: Institutional Investor

The $121.8 billion New York State Teachers’ Retirement System has committed $150 million to MBK Partners’s Fund V in its first allocation to the Korean alternative asset manager.

It is part of Nystrs’s $1 billion push into new private equity investments, despite legislators and stakeholders arguing against such strategies.

The fund’s total private equity portfolio was worth $4.5 billion as of October, making up 5.6% of its assets under management, just shy of its 6% target. It’s Nystrs’s largest alternative asset class and has a policy range between 2.6% and 8.6%.

Source: Chief Investment Officer

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