Insto roundup: GPIF, EBRD team up; CPIC mulls Swiss Re stake
AUSTRALIA
US index fund management giant Vanguard is drawing up plans to manage the superannuation assets of Australians.
The plans would take advantage of changes resulting from the Hayne royal commission, which triggered a huge shift in savings from retail for-profit funds to non-profit industry funds, and bring the $8.3 trillion firm into direct competition with local superannuation players.
Vanguard Australia managing director Frank Kolimago said the firm was at the start of the process of getting a superannuation offering to market, "given the rigorous licensing process involved".
Source: Australian Financial Review
QSuper’s new chief investment officer said the $113 billion Brisbane-based fund remains bullish on fixed income, is betting on US commercial real estate and considering investing in Asian private credit.
Charles Woodhouse reckons bond yields should stabilise at the current low levels. And if the economy deteriorates further and central banks add more monetary stimulus, he says bonds will be the only things that can perform strongly.
Over the last 10 years, QSuper’s 35% allocation to equity has returned 9.5% per year whereas its 25% bond allocation outperformed it by over 100 basis points.
Source: Investment Magazine
CHINA
Chinese state-owned entities are in talks about investing a combined $5 billion to $10 billion in state oil giant Saudi Aramco’s initial public offering, including sovereign wealth fund China Investment Corporation, Silk Road Fund and oil producer Sinopec.
The discussion came as Saudi Arabia seeks commitments from friendly governments to shore up the record share sale. Commitments from the investors haven’t been finalised, and the lineup of investors and the amounts each firm puts in will ultimately depend on the Chinese government.
Source: Bloomberg
China Pacific Insurance Company (CPIC) is in talks to invest at least $2 billion for a stake in Swiss Re, while the Zurich-based reinsurer would spend $500 million to $1 billion for a minority stake in the Chinese insurer as part of the deal, according to people familiar with the matter.
CPIC is looking to build partnerships overseas, while Swiss Re is keen to expand its footprint in Asia, betting on growing demand for insurance from the rising middle class in the region.
Discussions are at an advanced stage and an agreement may be reached soon, though talks could still be delayed or fall apart, the people said.
Source: Bloomberg
After the sale of a number of Anbang assets, including a $5.8 billion portfolio of hotels sold to South Korea’s Mirae Asset Management in September, the government is pushing forward with talks to secure investors from both the state-owned and private sectors.
Source: Financial Times
JAPAN
The Government Pension Investment Fund (GPIF) and European Bank for Reconstruction and Development (EBRD) have recently formed a partnership to promote and develop sustainable capital markets through a focus on green bonds and social bonds, as well as the incorporation of ESG assessments in fixed income investments.
EBRD's Green Bonds and Social Bonds are issued in alignment with the Green Bond Principles and Social Bond Principles, which are administered by the International Capital Market Association. These bonds provide investment opportunities for GPIF asset managers to contribute to make a sustainable society.
Source: GPIF
GPIF strongly believes that failing to address environmental, social and governance (ESG) risks is against its fiduciary duty. GPIF has been proactive in introducing ESG-related investment reforms to its portfolio since 2017.
“If you are managing money for a young guy, and you have to return the money to your customer within the month, of course, you don’t take climate risk into your analysis. But if you are managing money for 20 to 30 years, I think you should,” said Hiromichi Mizuno, GPIF's chief investment officer, in a talk before members of the Hong Kong Investment Funds Association.
Mizuno argues that for asset owners like GPIF who serve multi-generational clients and have investment time frames of 20 to 30 years, ESG risk factors have to be an important part of their investment strategy.
Source: The Asset
KOREA
Some heads of insurance subsidiaries of Korea's leading financial groups are not likely to have their term extended, due to weaker-than-expected performances including sales declines and investment losses.
According to the Financial Supervisory Service, Korea's 24 life insurers reported around a combined W2.1 trillion ($1.8 billion) in net profit in the first six months, over a 32% drop from about W3.1 trillion the previous year. Non-life insurers in the same period saw their net profit drop to W1.4 trillion, down 29.5% from the year before.
Source: Korea Times
MALAYSIA
Tabung Haji, Malaysia's pilgrimage fund, said it has restored its financial health after completing its restructuring plan in May this year by transferring under-performing assets to Urusharta Jemaah, a special purpose vehicle fully owned by the government.
The fund said that before the restructuring its liabilities exceeded assets by MYR10 billion ($2.41 billion), preventing it from paying hibah, a gift of asset, to its depositors under the Tabung Haji Act 1995. This law states that hibah or dividend cannot be paid if Tabung Haji’s financial obligations exceed its existing assets.
Source: Malay Mail
SINGAPORE
Singapore state investor Temasek named chief operating officer Chia Song Hwee as deputy chief executive and Rohit Sipahimalani as its new chief investment strategist, effective January 1 next year.
Sipahimalani, currently joint head of Temasek’s investment group, will drive the investment stance and asset allocation for the future. He will also oversee the portfolio strategy and group, which is led by Michael Buchanan.
Nagi Hamiyeh has been appointed joint head of the investment group and head of portfolio development at Temasek, while Ravi Lambah will be joint head of the investment group and head of direct investments. Rohit Sipahimalani will be head of Southeast Asia, in addition to his role as chief investment strategist.
Source: Deal Street Asia
Singapore’s GIC will buy its partner’s half-stake in a Beijing office building for around Rmb3.03 billion ($433 million) in a real estate investment drive that most recently saw the sovereign wealth fund bet on China’s emerging business district.
GIC is purchasing the 50% stake in the Azia Tower from state-owned Beijing Capital Land, the developer which completed the 42-storey tower in partnership with the Singaporean fund early last year.
Source: Mingtiandi
In a joint-venture deal, GIC partnered with Australian property group Charter Hall to acquire a landmark office building 25 kilometres northwest of central Sydney.
The firms paid A$415 million ($287 million) for the Jessie Street Centre in Parramatta, with Charter Hall taking a 10% interest in the venture, according to sources familiar with the matter.
The acquisition came three months after GIC acquired a 25.1% stake in an A$4.3 billion fund that holds three prime office properties in Sydney, and is the latest in a series of joint investments between Charter Hall and GIC.
Source: Mingtiandi
GIC took a 9.9% stake in EQT-owned Swedish pest control specialist Anticimex in a deal that values the company at around €3.6 billion ($3.97 billion).
EQT said it will remain as the controlling owner of the business, with GIC holding the same mix of instruments as the Sweden-headquartered private equity firm. The Singaporean investor’s involvement will allow Anticimex, which has 154 branches across 18 countries, to internationalise its shareholder base and accelerate its expansion in Asia.
Source: Private Equity News
INTERNATIONAL (EX-ASIA)
A group of US lawmakers led by Republican senator Marco Rubio introduced a bill last week that would block the Federal Retirement Thrift Investment Board from investing in Chinese stocks, citing security concerns.
The $600 billion retirement fund in November 2017 decided to shift the index it uses for its international stock investment fund to the broader MSCI All Country World ex-US Investable Market Index. The index is 7.5 % weighted to Chinese companies.
The plan currently relies on another MSCI index that excludes China, and the index shift is expected to take effect in the summer of 2020.
Source: Reuters
Eight in 10 investors – including both asset managers and asset owners – said they planned to increase their China exposure in the next 12 months, found a global survey by Invesco conducted in conjunction with the Economist Intelligence Unit.
The vast majority (nine in 10) of respondents claimed some level of dedicated exposure to China. And about half of those with dedicated China exposure said their investments had “risen significantly” in the past 12 months.
For respondents with no dedicated China investment exposure, the two most cited catalysts globally for considering such an allocation included: increased legal protections for foreign investors and improved corporate reporting in China.
Source: Invesco