GLOBAL

Banks and insurers around the world are likely to face climate-related stress tests in the next two to three years as regulators become increasingly aware of the urgency in gauging the risks from climate change, Fitch Ratings says in a new report.

Stress testing is expanding fast, led by watchdogs in jurisdictions with a clear focus on environmental policies, such as the EU and the UK. In the Asia Pacific region, Australia, Hong Kong and Singapore have announced tests for 2021 and 2022.


The tests announced will not test capital adequacy but may lead companies to look more closely at whether they need to hold more capital to cover potential losses from climate change risks. In the longer term, Fitch said it expected climate stress tests to feed into prudential capital requirements.

Source: Fitch Ratings

AUSTRALIA

QSuper and Sunsuper have announced a new chair and chief executive after the Queensland government approved the proposed merger of the superannuation funds.

Don Luke, current chair of QSuper, will be the chair of the board, while Bernard Reilly, current chief executive of Sunsuper, will lead the merged fund. QSuper CEO Michael Pennisi will step down from his position in September, when the merger is planned to proceed.

The merger will create a A$200 billion ($154.97 billion) superannuation fund, making it one of the largest in Australia.

Sources: QSuper, Australian Financial Review

Aware Super and Macquarie Infrastructure and Real Assets have struck an agreement to acquire telecommunications company Vocus Group for A$3.5 billion ($2.71 billion). 

The pair bought Vocus at A$5.50 a share, a 25.6% premium to the firm’s closing price of $4.38 a share on February 5, when Macquarie entered its indicative bid. As a result of the acquisition, Vocus has put on hold the initial public offering of its New Zealand operations.

“Aware Super’s participation alongside MIRA supports the growing interest of our fund in digital infrastructure as an asset class. We believe the sector has significant growth potential,” said Damien Webb, Aware Super's head of income and real assets.

Sources: Aware Super, Sydney Morning Herald

Catherine Farrugia

Superannuation fund Rest has appointed Catherine Farrugia as general manager of digital and Steven Ahn as general manager of member insights and strategy, as part of the restructuring of its member engagement team.

Farrugia will be responsible for digital strategy, design and delivery, while Ahn will look after member analytics, data science and market research.

Farrugia has been with Rest for 14 years and was previously general manager of channel management. Ahn joined the company last year and had previously worked across various industries doing a broad range of work including consulting, analytics and strategy.

Source: Rest

CHINA

China plans to create a new state-owned pension firm to tackle a massive funding gap as the largest country by population struggles to finance retirement despite decades of economic growth.

The China Banking and Insurance Regulatory Commission is mulling a national pension company with state-owned banks and insurers as shareholders, according to people familiar with the discussions. Details such as the shareholding structure and size of investment are still being hammered out, they said.

The nation’s elderly population could reach 300 million by the end of 2025, and the gap in retirement savings could hit Rmb10 trillion ($1.5 trillion) in a decade, according to a November report by the Insurance Association of China.

Source: Bloomberg

INDONESIA

The Indonesia Investment Authority (INA) is exploring making debut infrastructure investments worth $2.6 billion, said Kartika Wirjoatmodjo, deputy minister of state-owned enterprises, on March 10.

The new sovereign wealth fund, seeded with $5 billion by the Indonesian state and targeting a further $16 billion from foreign institutions initially, was set up to spur infrastructure investment in the Southeast Asian nation. Its first chief executive and board members were announced in February.

Source: Reuters

KOREA

The National Pension Service (NPS) has drawn criticism from retail investors after selling Korean stocks to meet its asset allocation targets.

The public retirement fund maintained its net-selling position on Korean stocks for a record-breaking 48th consecutive trading session as of last week, selling local stocks worth W14 trillion ($12.31 billion) during the period. Some retail investors are lashing out at the NPS, saying it was the main culprit behind the Kospi index falling below the 3,000 mark.

NPS’s asset allocation target shows that domestic stocks should account for around 16.8% of the pension fund's W834 trillion, meaning another W24 trillion worth of Korean stocks are set to be sold to meet the target. NPS plans to reduce its domestic equity allocation to 15% by 2023, while increasing its foreign stock allocation to 30%.

Source: The Korea Times

MALAYSIA

Khazanah’s chief executive predicts global airlines, including Malaysia Airlines – taken private by the sovereign wealth fund in 2014  will undertake mergers after Covid-19. 

Speaking in a radio interview, Shahril Ridza Ridzuan said: “Once Covid-19 is over and once there is stabilisation in the aviation industry, we should explore again the question of whether the government should be the sole owner of Malaysia Airlines or whether we can bring in other partnerships.”

He said Khazanah’s outlook for the airline industry was “fairly dismal” until at least 2024 and that the sovereign wealth fund expected to support Malaysia Airlines’ parent company for the next five years, but declined to confirm whether more money would be injected into the group.

Source: FMT

SINGAPORE

Singapore sovereign wealth fund GIC has formed a net lease real estate platform targeting $1.2 billion of strategic assets with property investment trust company RPT Realty, hedge fund manager Zimmer Partners and private investment firm Monarch Alternative Capital.

The four parties committed to adding $470 million each to the platform over the next three years. The initial investment portfolio will be seeded by RPT.

This marks GIC's second venture with RPT after the sovereign fund took a 48.5% stake in a $412.4 million shopping centre joint venture with RPT in October 2019.

Source: The Straits Times

Singapore state investor Temasek has invested in Singaporean cybersecurity company Snyk. The startup raised a total of $300 million in a series E round also backed by US venture capital firms Accel and Tiger Global and other existing investors.

The latest round gives Snyk, whose technology allows developers to securely build applications, a post-money valuation of $4.7 billion.

Source: DealStreetAsia

Temasek has invested $500 million in Leapfrog to support the Mauritius-based impact investor's expansion and anchor its future funds. The deal gives Temasek a minority stake in Leapfrog and a non-executive seat on its board.

LeapFrog provides growth capital to companies across Asia and Africa. Since the firm's inception in 2007, it has received over $2 billion from institutional investors. In 2019 Temasek set up a subsidiary impact private equity fund ABC World Asia to invest in climate and water solutions, sustainable agriculture, smart cities, financial inclusion, health and education.

Source: DealStreetAsia

GIC has partnered fintech player Ion Group to launch a €1.86 billion ($2.21 billion) takeover bid of Italian credit analysis and management group Cerved. Ion will pay €9.5 per share, a 43% premium on the share’s average price over the last 12 months.

In January 2021, Ion confirmed its €1.5 billion takeover of Italian banking software provider Cedacri. In 2019 it took a majority stake in financial news company Acuris for £1.35 billion ($1.88 billion) and acquired trading software firm Fidessa for £1.5 billion in 2018.

Source: Reuters

GIC has acquired a 47% stake in Atlanta-based Altium Packaging from US conglomerate Loews Corp, valuing Altium at $2 billion.

Loews expects to receive about $410 million in cash as part of the transaction, which is expected to close within 30 days. Altium supplies recycled high-density polyethylene to businesses across North America.

Source: Reuters

TAIWAN

Su Yu-Ching, BLF

The new chief of Taiwan’s Bureau of Labor Funds (BLF) wants to overhaul its investment operations and plans to ask the island’s financial regulator to set stricter due diligence for its outsourcing, in a bid to improve the pension supervisor’s image following a corruption scandal.

According to a speech by new head Su Yu-Ching, the pension fund’s internal domestic investment team will have to regularly report on their transactions to the regulator. She said BLF had introduced 12 measures to beef up supervision in four areas: investment processes, operation, management control and anti-corruption.

Su, a former chief executive of Taipei Exchange, was appointed after her predecessor, Tsay Feng-Ching, was transferred to the labour ministry in February following the bribery scandal involving Yu Nai-wen, BLF’s former domestic division investment head.

Source: Bureau of Labor Funds

BLF on March 12 named the five managers it has chosen to run a $2.3 billion global multi-asset mandate as Fidelity International, JP Morgan Asset Management, Ninety One, Schroders and T. Rowe Price.

BLF had invited bids for the mandate, as well as a $1.64 billion global infrastructure securities mandate, in October.

Source: Bureau of Labor Funds

INTERNATIONAL (EXCLUDING ASIA)

Ben Meng, Calpers' ex-CIO

A lawsuit has been filed against California Public Employees’ Retirement System (Calpers) demanding it turn over transcripts, recordings and notes from a closed-door board meeting held on August 17 allegedly to discuss the departure of former chief investment officer Ben Meng.

The lawsuit, filed on March 8 by former Calpers board member and investment officer JJ Jelincic, said the board discussed Meng’s resignation at the meeting and thereby violated California’s open meetings law.

Meng had resigned on August 5 amid much controversy from the $440 billion fund, which has still not replaced him.


Source: Chief Investment Officer