Insto roundup: Future Fund selling private equity; AIA poaches new CEO from Ping An

Australia's Future Fund trims private equity assets; AIA hires new CEO from Ping An; Indonesia's government not to bail out cash-strapped life insurer; Korea's NPS and Malaysia's EPF ally to build insights on social security safety nets; 24 Korean instos commit $1.2 billion to AMP Capital infrastructure debt fund; Temasek to add US assets, and more.
Insto roundup: Future Fund selling private equity; AIA poaches new CEO from Ping An
Future Fund, Australia's sovereign wealth fund, is in the midst of selling off a “large slice” of private equity assets on the secondary market as it looks to free up more capital in the event of a drawdown. The fund currently has about 16% in private equity and about one third in public market equities. 
David Neal, chief executive officer of the A$167 billion ($108.62 billion) Future Fund, said his team had struggled to make a dent in the portfolio despite “quite aggressively” selling off other private assets like the UK’s Gatwick Airport, because prices kept going up. He said the net cash flow from the holdings was $6 billion over the last 12 months and would be the same again this year.

“If anyone wants a large slice of really high-quality private equity let me know because we are looking,” Neal told delegates at Investment Magazine’s Fiduciary Investors Symposium in the Yarra Valley.  “We have a process underway at the moment of doing a secondary sale of private equity, it is essentially a rebalancing trade.”

Source: Investment Magazine

UniSuper, a A$80 billion superannuation fund, is more exposed to companies involved in fossil fuels than it was a year ago, according to its second annual climate risk disclosures released yesterday.

At June end, UniSuper had 12% of its exposures in companies involved in coal, gas and oil. This is up from 18 months ago, when 8% of the fund's exposures were in fossil fuels. UniSuper said its exposure to fossil fuel was on par with MSCI World and lower than ASX 200 (which has 23%), and that it varies based on market movements and investment decisions.

"Illustrating the level of variability, at the time of writing (October 2019) we estimate our exposure to be around 9%," the report said. In August, UniSuper chief investment officer John Pearce said simply divesting certain holdings is not an effective strategy, at the FSC summit.

Source: Financial Standard

Cbus and UniSuper invested in a new A$315 million bond issue that the government will use to finance affordable housing in five states. Cbus took up A$30 million of the National Finance and Investment Corporation's bond issue, while UniSuper's investment size was not reported.

Cbus chief investment officer Kristian Fok said the fund is a second-time investor in NHFIC's social and affordable housing bonds. "As the leading super fund for the building and construction sector we are pleased to invest in NHFIC bonds that meet our investment risk-return criteria and fund new housing construction for Australians in need."

Source: Financial Standard

As the trade war continues to drag on, investors are becoming more concerned with whether their investments should be used to fund companies that could be against national interest, a fund manager suggested.

In a presentation during the UBS Australasia Conference 2019, the founder and managing partner for Aitken Advisors, James Aitken, that while the US Congress might not be able to stop investment into China, its current narrative around a Chinese enemy could sway pension funds away from buying Chinese assets. 

“Many elements of this discussion are quickly becoming: are you with us or against us?” Aitken said. “There will be more and more questions about whether it’s appropriate for Australian superannuation funds to allocate to a Vanguard strategy or whoever it happens to be. Is it appropriate when there’s domestic national security concerns about certain aspect of CCP (China Communist Party) behaviour that Australian saviours are potentially underwriting stuff that could be used against us?”

Source: Nest Egg

Asia-focused insurer AIA Group on November 22 named Lee Yuan Siong, a co-CEO at Ping An Insurance, as its chief executive officer to replace company veteran Ng Keng Hooi.

Lee will take over as CEO and president-designate from March 1, 2020, and will assume full responsibility from June 1, AIA said in a statement issued to the stock exchange. Meanwhile Ping An said it had accepted his resignation and that Lee will continue to work until January 31, 2020.

Before joining Ping An, China's largest insurer by market value, in 2013, Lee worked at Prudential and the Monetary Authority of Singapore. He will take over at AIA at a time when the insurer is seeing anti-government protests in Hong Kong hit sales of insurance products to mainland Chinese visitors.
Meanwhile, Ping An said it would appoint Lu Min to replace Lee as the chief insurance business officer in charge of the insurance business and the retail customers' integrated financial business of the company. Lu is currently Ping An's chief information officer. The insurer did not say who will succeed Lee in other capactiites. 

Source: Ping An, Channel News Asia
Indonesia does not intend to bail out a state-owned life insurer that needs an injection of more than $2 billion, the finance ministry said on November 20, after reports that the attorney general’s office has been asked to probe possible fraud.
Asuransi Jiwasraya has faced financial woes since late 2018, when asset investments, including in risky cheap stocks, turned sour, prompting a delay in paying maturing policies.
The company, which has been put under scrutiny by the Financial Services Authority’s (OJK), needs a IDR32.9 trillion ($2.33 billion) fund injection to boost its risk-based capital ratio to a minimum requirement of 120%, according to company documents submitted to parliament’s finance commission.
Source: Reuters
The National Pension Service (NPS) and Malaysia’s Employees Provident Fund has inked a memorandum of understanding (MoU) to gain insights into developing social securities safety nets.

The MoU formalises cooperation in training-related pension policy and initiatives, research projects and best practices information sharing. NPS offers four benefits for its members, namely old-age pensions, disability pensions, survivor pensions, and lump-sum benefits in the form of a one-time payment.

Source: The Malaysian Reserve, The Malay Mail

The Construction Workers Mutual Aid Association (CWMA) plans to commit $25 million to a global infrastructure blind-pool fund investing in senior or mezzanine debts with an investment period of about 10 years.

The South Korean savings fund has recently issued a request for proposal for the mandate. It will receive applications by November 29 and finalise the selection around February next year. Alternatives make up 19.4% of the CWMA’s W3.7 trillion ($3.1 billion) in assets as of the end of 2018.

A qualified manager needs to manage at least $300 million in infrastructure assets with fund managers having at least five years of experience in infrastructure investing on average. An additional key requirement is that the management companies and their representative fund managers must not have a history of breaching laws over the past three years.

Source: Korean Investors

Twenty-four South Korean institutional investors, including the National Pension Service, the Korean Teachers’ Credit Union and the Public Officials Benefit Association have committed approximately $1.2 billion to AMP Capital’s new infrastructure debt fund, which raised $6.2 billion at the final close in October.

AMP Capital Infrastructure Debt Fund IV invests in mezzanine debts on infrastructure assets in North America, Europe, Australia and other developed countries with a 10-year term, including a four-year investment period, according to investment banking sources earlier this month.

Source: Korean Investors


Temasek Holdings, the Singaporean investment company that is the biggest shareholder in Austria's AMS, said it backed the sensor maker's planned $5 billion takeover of German lighting group Osram, the fund's managing director told German weekly magazine Euro am Sonntag on November 23.

"We think the coming together of AMS with Osram is sensible, especially in the field of opto-electronics," Temasek's Uwe Krueger was quoted as saying. He added that he would not get involved in business decisions, a stance he had also made clear to the IG Metall Union, which had asked Temasek to speak out against the plans.

Source: Business Times

Temasek Holdings will continue to increase its allocation of funds to the US despite escalating trade tensions, the Singapore state investor's head of Americas John Vaske said.

Speaking ahead of the Asia-Pacific Agri-Food Innovation Week summit that started on November 20, Vaske said a substantial portion of Temasek's available funds had been allocated to US deals, and despite uncertainties regarding the trade war China the long-term thematics of its investments remain sound.

"In the last three or four years, if we freed up a dollar for re-investment, 40 cents of it, plus or minus, is going into the US," Mr Vaske, who is also head of agribusiness at the $313 billion firm, said in an interview. About 15% of Temasek's portfolio is invested in North America, and around 7 per cent in life sciences and agribusiness.

Source: Straits Times

Hong Kong's anti-government protests had a direct impact on one of the region's largest asset owners, when they rampaged through the Festival Walk in Kowloon on November 12, smashing glass and setting fire to the shopping mall's giant Christmas tree. Festival Walk is one of the properties held by Singapore investment company Temasek Holdings’ wholly owned property unit Mapletree Investments.

It bought the shopping mall in 2011 for HK$18.8 billion, and the asset is now held in the Mapletree North Asia Commercial Trust after a reorganisation in 2013. The real estate investment trust tumbled to a 10-month low in Singapore after the news.

Source: South China Morning Post


Prime Minister Prayut Chan-o-cha stirred some controversy after he ordered related agencies to study the feasibility of using social security funds as loans for investment. Prayut ordered the Social Security Office and related agencies to look into the the legal feasibility of using social security funds to yield maximum benefits to social security benefit holders and the general public.

However, the idea appears to be illegal. A spokeswoman for the government said initial studies show the Social Security Fund Act BE 2533 does not authorise the SSO to lend the fund balance as loans, as such action will violate the objectives of the fund. The fact that the SSO is not recognised by the Bank of Thailand as a financial institute also forbids the office to legally offer any loans.

Source: Pattaya Mail

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