Insto roundup: CIC shifts most large-cap equities to passive; Cbus, Media Super may merge

AUSTRALIA

Construction industry fund Cbus, which has A$56 billion ($38.5 billion) in assets under management, is in tie-up talks with A$6 billion Media Super.

Media Super, which has 78,000 members across the printing, media, arts and entertainment sectors, holds around A$6 billion in funds under management (FUM), while the construction and building industry fund has 556,00 members and A$53 billion in FUM.

Following an extensive tender process, Media Super has opted to explore a number of merger options with Cbus, which could result in the fund retaining its own brand in a tie-up with the larger parent fund scheduled for as soon as early 2021.

Source: Financial Review

Cbus has also invested A$49 million in the third bond issue by National Housing Finance and Investment Corporate (NHFIC), while it also plans to raise investments in private debt over fears of a stock market correction.

The bond will fund a number of large construction programmes through Community Housing Providers (CHPs) in Victoria, Tasmania, NSW and South Australia. Cbus Super has invested in all three of NHFIC’s issuances, bringing its total investment to A$88 million.

Meanwhile the Melbourne-based superannuation fund is targeting loans for real estate developers and for infrastructure projects such as airports that are offering high-single digit returns, said chief investment officer Kristian Fok. He noted that the fund remains cautious on the outlook for equity markets. 

Source: Cbus Super; Pensions & Investments

Hesta announced a climate change transition plan (CCTP) that will see the A$52 billion industry super fund commit to reducing carbon emissions in its investment portfolio by 33% by 2030 and to be ‘net zero’ by 2050.

Hesta is the first major Australian superannuation fund to make carbon reduction commitments of this scale as part of a broader CCTP that seeks to effectively align the fund’s actions and investment portfolio with the goals of the Paris Agreement.

“Climate change presents a financial risk to the Hesta investment portfolio and the world in which our members will retire. An urgent response is required and the actions within the Climate Change Transition Plan have been thoughtfully and carefully designed to provide an effective and tangible response.”

Source: Hesta

CHINA

China’s $941 billion sovereign wealth fund shifted more than 60% of its global large-cap value equity portfolio to passive strategies after long-time manager Susan Gao left. The remaining of the $10 billion portfolio has newly promoted managers running fundamental large-cap and digital-economy stocks.

INDIA

Singaporean sovereign wealth fund GIC has reportedly acquired a 1.5% stake or 1,64,30,820 equity shares in India’s ICICI Prudential Life Insurance Company for $111.5 million.

GIC bought the shares from ICICI Bank, reported Insurance Business Asia. In 2015, Singapore state investment firm Temasek purchased a 2% stake in ICICI Prudential.

ICICI Bank now holds 51.4% of ICICI Prudential Life, a joint venture between the Indian bank and British insurer Prudential.

Source: Life Insurance International

JAPAN

The life insurance industry of Japan is expected to contract by 1% this year compared to the 2% growth registered in 2019, according to data and analysts specialists GlobalData.

It revised Japan’s insurance forecast in the aftermath of the global Covid-19 outbreak. The Japanese life insurance market is forecast to grow by 0.9% during 2019-2023.

The Covid-19 crisis has forced the country’s economy into recession, with GDP falling by 3.4% in the first quarter of 2020 after a 6.4 drop in the last quarter of 2019. However, life insurance is getting easier to access, the Seven-Eleven teaming up with insurer MS&AD to offer it through its stores. 

Source: The Actuary

KOREA

The National Pension Service sold 1.09 million shares in the nation’s leading hospitality and duty-free operator Hotel Shilla in the second quarter, a filing showed on June 28.

As of June 24, NPS was holding 9.73% voting rights in the hotel and resort unit of Samsung, down 2.74 percentage points from March 31, with 12.47%. From April 1 to June 24, the pension fund sold Hotel Shilla’s shares 50 times out of 78 times of its stock trading.

Despite the state agency’s massive dumping, shares of Hotel Shilla hit W85,200 ($70.77) on April 29, but they faltered to W68,700 as of the end of trading on June 26.

Source: Korea Herald

MIDDLE EAST

Abu Dhabi state investor Mubadala Investment Co is under-invested in Asia and plans to expand its portfolio in the region, group chief executive officer Khaldoon Khalifa al-Mubarak said on June 22.

Mubadala, the second-biggest state investor in Abu Dhabi behind Abu Dhabi Investment Authority (ADIA), has 9% of its portfolio invested in Asia. "From a relative perspective we are under-invested in Asia. You'll see us grow our portfolio in Asia," Mubarak said at a Bloomberg event.

A consortium of six global investors entered into a $20.7 billion agreement with Abu Dhabi National Oil Company (ADNOC). The six companies involved include Singapore’s sovereign wealth fund GIC and Ontario Teachers’ Pension Plan Board.

As part of the agreement, the group will invest $10.1 billion to acquire a 49% stake in a newly-formed subsidiary, ADNOC Gas Pipeline Assets, with lease rights to 38 pipelines. ADNOC will hold the majority stake of 51% and will retain ownership of the pipelines.

It is the single-largest energy infrastructure investment in the region, and the largest in the world in 2020, according to Abu Dhabi National Oil Company. It is also part of the United Arab Emirates' national oil company’s strategy to attract foreign capital and maximize the value of its assets.

Source: CNBC

GIC has invested in London-based payment solution provider Checkout.com in its series B fundraise of S$209 million ($150 million), according to a press release.

The startup’s valuation now hit S$7.6 billion ($5.5 billion). The funding round was led by Coatue, along with participation from existing investors including Insight Partners, DST Global and Blossom Capital.

Source: Singapore Business Review

ESR will expand its $25.4 billion in assets under management in Australia with a newly formed A$1 billion ($692 million) develop-to-hold logistics fund partnership with Singapore’s GIC.

“We’re seeing an increasing appetite from our capital partners for logistics assets as the asset class looks to benefit from the growth in adoption of online shopping, a trend which we believe will accelerate,” said Phil Pearce, chief executive of ESR Australia. “The success of our capital recycling and asset light strategy combined with the growing demand for logistics space, and emerging opportunities in adjacent areas such as data centres, makes us optimistic about the prospects for ESR Australia.”

Source: Mingtiandi

Great Eastern tied up with Malaysian telco Axiata to invest in its regional digital financial services business.

The Singapore-based insurance and financial services giant is pumping in about $70 million (S$97.5 million) for a 21.9% stake in the venture with Axiata holding the rest. The new venture will fund the expansion of Axiata Digital's financial services business over the next year in Malaysia and the region.

Source: The Straits Times

VIETNAM

Canadian insurer Manulife surfaced as the top bidder for Aviva’s Vietnam business. The deal, while still under private negotiations, is understood to be worth several hundred million dollars. Discussions are still ongoing – and another lead bidder could emerge.

Under the deal terms, a bancassurance arrangement would be negotiated with Aviva’s domestic partner, the Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank), whereby Manulife would be authorised to sell products through the state bank’s branches.

Source: Blomberg, Insurance Asia News

INTERNATIONAL

Sovereign wealth funds are investing more at home, a trend set to accelerate in the wake of the economic carnage wrought by Covid-19. There has been a flurry of recent domestic deals, such as Turkey's fund injecting $3.1 billion into three state banks and Temasek supporting a $1.5 billion rights issue by Sembcorp Marine.

That's in addition to withdrawals from the Nigerian and Norwegian funds to help their governments deal with the economic impact of the virus.