Insto roundup: China's SOE stake shift; Taiwan insurers hungry for ETFs

AUSTRALIA

AustralianSuper made its first real estate investment in New Zealand’s property market to develop a N$500 million ($335.4 million) industrial platform under a partnership with Logos. The initiative, which focuses on Wiri Logistics Estate, will take advantage of direct access to Auckland’s major arterial roads and motorways, along with the Conlinx Inland Port that services the Ports of Auckland.

Bevan Towning, head of property for Australia’s largest industry super fund, said the project was a great opportunities to grow its investment footprint in New Zealand, for which the fund has agreed to buy an additional 14 hectares of land neighbouring the Wiri Logistics Estate.

Source: IPE Real Assets

First State Super pioneered an investment in Australia’s newest housing asset class, build-to-rent, to lease 61 apartments as key-worker rental units in Sydney’s Epping. The superannuation will partner with Altis, a private real estate funds manager, to launch the investment programme in a bid to drive more affordable rental housing.

Source: Australian Financial Review

AMP’s A$3.3 billion ($2.32 billion) deal to sell its life insurance business to London-based Resolution Life is “highly unlikely” to proceed due to opposition from New Zealand’s central bank, prompting the group to scrap plan to pay interim dividend.

The company said the condition the Reserve Bank of New Zealand had laid out – structuring the life insurer with separate "ring-fenced" assets for New Zealand policy holders – will damage the commercial returns from the sale and that “the failure to meet this condition precedent is exceptionally disappointing”.

Source: The Sydney Morning Herald

CHINA

China will expand a pilot programme this year to transfer government holdings in state-owned enterprises to social security funds nationwide in response to concerns about the sustainability of the pension system.

The State Council decided at an executive meeting on July 10 to push for the transfer of 10% of the equity in state-owned companies to the National Social Security Fund and relevant local entities. The move is designed to offer fresh impetus to a 2017 trial plan that was limited to a small number of central government-owned businesses in selected provinces.

The pilot programme stipulated that the transfer should be completed as soon as possible after 2018, but as of March only five of about 600 companies had completed the equity transfers, said former finance minister Lou Jiwei, former Deputy Commissioner of China’s State Taxation Administration Xu Shanda and Zhang Junkuo, vice president of the Development Research Center of the State Council. 

Source: Caixin

China’s largest insurer Ping An Insurance announced on Friday (July 12) that it has picked up a stake in edtech firm iTutorGroup through its overseas subsidiaries. Following the investment, iTutorGroup will become part of Ping An’s smart education business. The quantum of the stake and the financial details of the transaction were not disclosed.

According to a report by 36Kr, Ping An initially planned to take over iTutorGroup for $500 million. However, iTutorGroup had denied any possibility of a prospective acquisition at that point in time.

Source: DealStreetAsia

INDIA

Indian renewable energy company Greenko Energy Holdings said on Thursday (July 11) it has obtained a total equity commitment of $824 million from its existing shareholders to fund its business plan.

Singaporean sovereign wealth fund GIC and Abu Dhabi Investment Authority have contributed a combined $329 million in funds that add to a previously announced raising towards IREP Projects Equity commitment. 

Last month, the Indian renewables firm said it would receive $495 million from the same investors to finance two energy storage projects totalling 2.4 gigawatts (GW), including 1.2 GW in Pinnapuram and 1.2 GW in Saundatti. These assets are seen to be completed in 2022.

Source: Renewables Now

KOREA

National Pension Service (NPS) saw the total worth of its stock holdings in 10 main Korean conglomerates rise more than 11% in the first half of the year, according to a market tracker.

According to Chaebul.com, the total value of stocks in the top 10 conglomerates held by NPS stood at $62.6 billion as of the end of June, up 11.6% from a year ago. The pension fund held an average 8.02% stake in those groups, up 0.26 percentage points from a year before.

The figures underline NPS's potential strength as a driver of better stewardship in Korea, whose chaebols are often criticised for the complexity of their shareholding structures. 

Source: Yonhap News Agency

Meanwhile, NPS will strengthen the investment functions of its overseas offices as it seeks to raise overseas assets as a proportion of total investments, according to a high-ranking official on July 8. 

“The NPS is planning to transfer more investment functions to its three offices in New York, London and Singapore. The NPS established a PEF investment unit at the end of last year as part of its strategy to turn its regional portfolio into global portfolio,” said Choi Hyung-don, head of NPS's private equity fund investment unit.

He also emphasised the pension fund aims to expand alternative investments instead of adding to stocks. "We have gained approval for many of our alternative investment expansion plans from the NPS Investment Management Committee. The main purpose is to expand alternative investment without increasing risks," Choi said.

Source: BusinessKorea

Korean Teachers’ Credit Union (KTCU) reached a preliminary agreement with Teachers Insurance and Annuity Association of America (TIAA) to launch a third joint venture with a capital of $510 million to further expand co-investments.

Under the memorandum of understanding signed on July 8, TIAA and KTCU will commit $260 million and $250 million respectively to the JV, KTCU said in a statement. The two retirement funds will also seek to cooperate in alternative investment in accordance with environmental, social and governance principles. It was not immediately known what the focus of the third JV will be. 

The funds have already formed JVs with $1 billion in assets that have invested in US commercial real estate debts since 2017. KTCU has $25 billion under management, while TIAA manages more than $1 trillion in assets for over 5 million subscribers.

Source: Korean Investors

South Korean institutional real estate investors have increased their focus on Europe, in a material shift away from their traditional US equity and debt allocations. The vast majority of South Korean overseas real estate investment in 2018 went into Europe, up from 59% in 2017.

This trend is expected to gather momentum, with more than 75% of cross-border investment activity expected to be directed to Europe – a nearly complete reversal of the usual European/US real estate investment split in past years.

The notable increase in South Korean real estate investment in Europe comes amid a marked slowdown in Chinese investments and only the earliest stages of interest from Japanese institutional investors. 

Source: Lexology

State-run deposit insurer Korean Deposit Insurance Corp (KDIC) said  on July 9 that it had lost a lawsuit to recoup assets related to the now-bankrupt Busan Savings Bank in Cambodia.

The lawsuit was filed by a Korean businessman with a Cambodian court in 2013 to return the stakes of a real estate project, called "Camko City", which were also claimed by KDIC. In a statement, KDIC said it will closely look into the ruling and it plans to appeal to a top court in Cambodia.

Busan Savings Bank, which was at the center of a massive influence-peddling scandal involving bank officials, was declared bankrupt by a court in August 2012 after its operations were suspended for lack of capital. As a bankruptcy trustee of Busan Savings Bank, the KDIC has sought to recoup the bank's assets in Cambodia.

Source: Yonhap News Agency

NEW ZEALAND

New Zealand Super will allocate N$240 million ($168.6 million) of its NZ$41 billion in assets  to a government-backed venture capital fund worth NZ$300 million, to support early-stage startups in the country, according to the government’s latest budget proposal.

The venture capital fund will be managed by New Zealand Venture Investment Fund, which also contributed NZ$60 million ($42.1 million), to help fill the “capital gap” for local firms that expand beyond the early startup phase, the announcement said.

Source: Deal Street Asia

SINGAPORE

Temasek Holdings intends to build and grow a larger healthcare technology platform in India to augment the growth of its current business, called Sheares Healthcare Group. Sheares Healthcare owns and provides healthcare delivery services in Asia and around the world, via its operating team in Singapore. 

On July 5 Sheares Heal invested $50 million in Asia Healthcare Holdings (AHH), which invests in single-specialty healthcare businesses in India and South Asia. AHH is supported by TPG Growth, a global mid-market growth equity platform unit of TPG Capital.

Source: Sovereign Wealth Fund Institute

Italy’s Benetton family said on Thursday (July 11) it had sold an indirect minority interest in Spanish tower group Cellnex to Abu Dhabi Investment Authority (Adia) and Singapore's GIC. The Benettons sold 5% of a vehicle called ConnecT which holds 29.9% of Cellnex, with 2.5% going to each sovereign wealth fund.

The sale follows the exercise of a call option by Adia and GIC. Following the deal, Benetton’s holding company Edizione will remain ConnecT’s largest shareholder with a 55% stake, while Adia and GIC will each hold 22.5%. 

Source: Reuters

TAIWAN

Life insurer demand for Taiwanese fixed income exchange-traded funds (ETFs) have caused its ETF market to grow 67% this year, the fastest rate in the world, data compiled by Bloomberg showed.

Local rules stipulate that ETFs denominated in New Taiwan dollars and listed in Taipei don’t count toward insurer limits on overseas assets. That’s made the local fixed income ETFs appealing, as they mostly invest in US credits that yield more than domestic bonds.

Insurers can buy up to 50% of a single newly issued ETF, versus just 10% of a bond mutual fund. And while they can only put 10% of their investment portfolios in ETFs, they held just NT$676 billion in bond ETFs as of May, equivalent to 2.7% of their investments, according to calculations by Bloomberg based on data from Taiwan's Financial Supervisory Commission and the Taiwan Insurance Institute.

Source: Bloomberg, Business Times

WORLD

Canada’s Public Sector Pension Investment Board, Australian property fund manager Charter Hall and the Charter Hall Prime Office Fund have acquired Australian telecoms firm Telstra’s global headquarters in Melbourne for A$830 million ($582.3 millon).

Stephane Jalbert

Stephane Jalbert, managing director of real estate investments for Europe and Asia Pacific at PSP Investments, said: “The strong yield profile of this investment and positive growth prospects for the city reinforce our long-term outlook of the Melbourne CBD office market.”

The acquisition comes after PSP set up its first office in Asia recently, with John Kim joining the C$159 billion ($119 billion) fund in February from Dutch private equity firm AlpInvest Partners as a senior director.

Source: APAC Real Estate

Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), has taken an unusual step to funding its investments: taking out an $11 billion bank loan.

The PIF is the centerpiece of the Kingdom’s Vision 2030 diversification plan. While the effort to list shares of the state oil company, Aramco, in an initial public offering has been all but abandoned, new efforts to raise revenue for the fund have emerged. 

This is most recently reflected in the decision to sell the PIF’s share in the state petro-chemical firm SABIC to the state-owned oil company Aramco, which would put about $70 billion in the PIF’s hands to invest abroad. 

Source: American Enterprise Institute

The San Francisco City & County Employees’ Retirement System (SFers) has committed $50 million to PAG’s third special situations fund, according to a recent board meeting document.

Hong Kong-based private equity firm PAG, which is targeting up to $1 billion for PAG Special Situations Fund III, has also received a $75 million commitment from Texas Permanent School Fund.

Source: Nikkei Asian Review

Story updated to delete outdated China Investment Corporation news.