Insto roundup: GPIF posts 2.68% quarterly returns; GIC backs PE bid for Morrisons
AUSTRALIA
The partnership formed by several institutional investors in Australia including QIC, Future Fund, Aware Super, Hostplus and LGIASuper, has completed its acquisition of the Australian business of Tilt Renewables.
Powering Australian Renewables (PowAR), entered a binding agreement in March to acquire the Australia business of Tilt Renewables at NZ$7.80 a share. Mercury NZ had also signed an agreement to acquire the New Zealand business.
PowAR is a A$2 billion partnership between the QIC Global Infrastructure Fund and its co-investors, which include Aware Super, Hostplus, TelstraSuper, MLC, and LGIASuper, the Future Fund and AGL Energy Limited.
Source: QIC
Westpac has agreed to sell its Australian life insurance business to TAL Dai-ichi Life Australia for A$900 million.
The sale price represents 0.96x of its FY20 embedded value, and a A$1.3 billion total accounting loss on sale is expected, with A$300 million to be realised in the bank’s FY21 results, and the remaining on the completion of sale.
Subject to regulatory approval, the completion of the sale is expected to happen by the second half of 2022.
The deal is the latest in a slew of Australian lenders selling off their insurance business, including Macquarie Group, Suncorp Group and AMP Limited, over the past five years.
Industry super fund CareSuper posted a 17.49% return for its default balanced option for the financial year that ended in June.
The performance was its best in its 35-year history, the fund said in a statement, and can be attributed to share markets, fuelled by monetary and fiscal stimulus from central banks and governments globally.
The A$16 billion fund added that private equity, credit, infrastructure and direct property investments also yielded strong returns, while fixed interest and cash returns were much lower due to low interest rates.
Direct property in the fund’s portfolio had 7.5% returns for the financial year, compared with 1.1% and 0.16% returns for fixed interest and cash respectively. Numbers for private equity, credit and infrastructure were not available.
Source: CareSuper
CHINA
China Investment Corporation (CIC) held its 2021 semi-annual conference on August 5, where it stated that it had improved internal management, explored new modalities for outbound investment, deepened the mandated management of state-owned financial capital, and enhanced the core competitiveness of Central Huijin’s holdings.
In the second half of 2021, CIC will remain strategically persistent and add more impetus into its reform and development through both consistency and creativity.
Source: CIC
China issued sweeping new regulations for credit rating businesses in a key step toward bringing the scandal-plagued industry under better oversight.
The rules, jointly issued by five central government bodies including the central bank and the top economic planner, spell out requirements for rating companies’ business operations, corporate governance and disclosure, as well as punishments for industry malpractice.
The rules require companies to score creditworthiness based on the probability of default and reduce the proportion of highly-rated bond issuers to a “reasonable range,” enabling investors to better differentiate among bonds. The rules also require that rating bureaus do more to avoid conflicts of interest, urging them to strengthen efforts to insulate credit rating departments from other operations.
Source: Caixin Global
Fidelity International has obtained Chinese regulatory approval to set up a wholly-owned mutual fund unit in Shanghai, giving it a toehold in the country’s $3.5 trillion retail fund market.
The long-awaited approval by the China Securities Regulatory Commission (CSRC) came a year after Fidelity applied to set up the business.
It also came after rival BlackRock became the first global asset manager licensed to start a wholly-owned China mutual fund business in early June.
Source: Reuters
JP Morgan has received regulatory approval to take full control of a brokerage in China, making it the first foreign bank to do so as China further liberalizes its $50 trillion financial services industry.
The China Securities Regulatory Commission approved the registration of JP Morgan International Finance taking full ownership of its Shanghai headquartered securities venture, according to a statement on August 6.
China represented "one of the largest opportunities in the world," said Jamie Dimon, chairman and chief executive officer of JP Morgan.
Source: China Securities Regulatory Commission
BNP Paribas Securities Services has been approved to provide custody services for China’s Qualified Foreign Investor (QFI) programme, which allows international investment in Chinese stocks and bonds.
The custodian bank can now “directly support foreign institutional investors across the full scope of schemes allowing access to China’s equities and bond markets, in addition to providing a full range of foreign exchange services”, it said in a statement on August 4.
China scrapped investment quotas for several cross-border schemes, including the QFI, last year to encourage foreign investment in the onshore markets.
Source: BNP Paribas Securities Services
JAPAN
Government Pension Investment Fund (GPIF)’s assets have reached 191.6 trillion yen ($1.74 trillion), as it posted a 2.68% return in the first quarter from April to June, driven by overseas assets, the pension fund released on Friday.
Despite the 0.25% loss in domestic equities in the first quarter, the world’s largest pension fund had outperformed benchmarks in all asset classes. Notably, it gained 8.62% in foreign equities and 1.87% in foreign bonds.
Source: GPIF
Pension Fund Association for Local Government Officials, known locally as Chikyoren, has invested an unspecified sum in domestic logistics fund managed by GLP Japan.
It has chosen Mizuho Trust & Banking as the custody and administration service provider, the pension fund announced on July 30. GLP is a Singapore-based real estate and infrastructure investment firm.
Source: Chikyoren
KOREA
Public Officials Benefit Association (POBA) has committed €80 million ($95 million) to AXA Investment Managers' fund, which recently raised €1.9 billion to invest primarily in life science offices and research facilities in Europe and Asia, according to AXA.
The fund, managed by AXA IM Alts, the French asset manager's alternatives business unit, made its first investment via Kadans Life Science Partner, which develops and operates European science parks and lab offices.
Source: The Korea Economic Daily
MALAYSIA
The US Department of Justice announced it repatriated an additional $452 million to Malaysia in conjunction with the 1Malaysia Development (1MDB) scandal. This brings the total amount returned to $1.2 billion.
According to civil forfeiture complaints more than $4.5 billion were misappropriated by 1MDB officials and associates from 2009 through 2015.
Source: Reuters, US Department of Justice
SINGAPORE
A GIC-backed private equity bid for UK supermarket chain Morrisons increased its offer by 7% to nearly £10 billion ($14 billion). A unit of American multinational Koch Industries is also behind the bid, which is led by Softbank-owned private equity firm Fortress.
Under the new deal, GIC would own 13% of a holding company set up to own the supermarket chain; Fortress and Koch would own 65% and 22% respectively. Canada Pension Plan Investment Board would provide financing through its credit arm but not own a stake.
Fortress’s previous bid was approved by Morrison’s board but opposed by shareholders.
Source: Financial Times
The Monetary Authority of Singapore (MAS) confirmed it was prepared to grant several digital payments service providers operating licences, in what analysts say is the city-state’s latest move to become a leading crypto-financial hub in Asia.
However, the successful applicants will have to put in place measures to meet its requirements, MAS added.
Observers said this was likely to accelerate the number of cryptocurrency firms moving to Singapore. In January 2020, Singapore introduced cryptocurrency legislation that required payment services to hold a financial licence, allowing some firms to operate while applying for the licence. MAS said it received 170 licence applications.
Source: South China Morning Post
INTERNATIONAL
A Hong Kong-based real estate developer backed by Ontario Municipal Employees Retirement System (Omers) has agreed to acquire a leading real assets fund manager with $130 billion of assets under management (AUM).
ESR Cayman has agreed to acquire ARA Asset Management for $7 billion. The acquisition would bring the firm’s total AUM to $175 billion, making it the largest real estate and real assets manager in Asia Pacific, and the third-largest in the world.
The deal will be completed by the beginning of next year. Once complete, ARA will be a subsidiary of ESR.
ESR counts Omers and Chinese tech firm JD.com as two of their largest shareholders.
Source: Financial Standard