Insto roundup: GPIF's CIO gets six-month extension; Temasek's unicorn hunt

AUSTRALIA

Australian bank Westpac is planning to offload its life insurance operations after the bank received interest from potential suitors. Two sources familiar with the development said that Australia’s second-largest bank has not taken a final call on the deal and the talks have just started.

Instead of completely divesting its life insurance operations, Westpac would prefer to collaborate with the potential bidder, the first source told the publication. The proposed life insurance unit is expected to have a valuation of approximately A$2 billion ($1.35 billion).

Source: Verdict

AustralianSuper warned the Minerals Council its position on the climate crisis was not good enough and the peak mining body needed to do more. The superannuation fund's head of environmental, social and governance issues, Andrew Gray, said it was a good example of a group of industry associations that had made general commitments to the principles of the Paris agreement, designed to limit global heating to two degrees celsius, but failed to say how their members would do so.

“They’ve got a very high-level statement about alignment with Paris but I want to see them do more,” he said, adding: "A high-level statement like that was probably where people were at a few years ago, but people need to keep evolving."

The Minerals Council’s position on the climate has already caused significant pain for the peak body, with its chief executive, Brendan Pearson, leaving in November 2017 after clashes with BHP and Rio Tinto, which were unhappy with its advocacy for coal.

Source: The Guardian

CHINA

China’s Ministry of Finance is continuing its efforts to boost the country’s creaking pension system by transferring its stakes in financial state-owned enterprises (SOEs) to the National Council for Social Security Fund.

Hong Kong- and Shanghai-listed Bank of Communications, one of China’s five largest state-owned banks by assets, announced on Monday (October 7) that the finance ministry will transfer 10% of its shares in the bank to the NCSSF. The shares were worth Rmb10.7 billion ($1.5 billion) at the close that day.

On September 26, the ministry completed the transfer of 10% of its stake in The People’s Insurance Company (Group) of China, one of China’s largest state-owned insurers, to the social security fund, the company said Sunday in a filing to the Shanghai Stock Exchange. The equity transfer, initially announced in December, was worth Rmb25.7 billion at the closing price on Monday.

Source: Caixin

INDIA

Institutional investors including Employees’ Provident Fund Organisation have shown high preference for Exchange Traded Funds and Fund of Funds over other category of mutual fund schemes as they contributed close to 93% of total investments in these vehicles as of the end of August, according to data from Associate of Mutual Funds in India.

EPFO’s input, for example, formed a large part of investments in ETFs, as the government had lifted the pension fund’s cap to invest in ETFs from 10% to 15% a few years ago.

Source: Economic Times

JAPAN

Hiromichi Mizuno, the high-profile chief investment officer of Japan’s Government Pension Investment Fund, will continue to helm the ¥159.2 trillion ($1.47 trillion) pension giant’s investment team for at least another six months, according to an announcement on October 1 on the Tokyo-based fund’s website.

That relatively short-term extension for Mr. Mizuno, who officially took up the reins as GPIF’s CIO from January 2015, reflects the fact that appointments for GPIF executive directors can’t extend beyond that of fund president Norihiro Takahashi, according to a GPIF spokeswoman.

Takahashi’s current appointment leaves him at the head of the fund through at least March 31.

Source: Pensions & Investments

GPIF plans to increase its investment in foreign bonds to cope with the Bank of Japan’s negative interest rate policy which has resulted in growing difficulties for managing funds in Japanese government bonds. However, the pension fund’s move to purchase more foreign bonds may affect the foreign exchange market.

The pension fund is considering revising its asset management plan to be able to treat foreign bonds as domestic bonds if they are hedged against potential losses linked with currency fluctuations, which would increase the amount in which GPIF can invest in foreign bonds.

GPIF had ¥JPY160.6 trillion ($1.49 trillion) in assets at the end of June, of which 18% sat in foreign bonds, just below the 19% cap. 

Source: Asia First

Allianz Real Estate agreed to buy a portfolio of rental apartment properties in Japan from Blackstone for €1.1 billion ($1.2 billion).

Marking its entry into the Japanese residential market, the property investment arm of the European insurer is poised to buy 82 multifamily assets, 78 of which are located in Japan’s four major cities: Tokyo, Osaka, Nagoya and Fukuoka.

Source: Allianz

KOREA

The National Pension Service (NPS) is inviting bids from financial institutions to provide risk aggregation services for its hedge fund strategies. Risk aggregation refers to the collection of data on a hedge fund’s position and evaluation of its risk exposure.

Companies seeking to provide the service must have at least three years of experience, and have the capability to pursue forward-looking analysis such as projections and what-if scenarios, the pension fund says in in its request for proposal on October 1.

The selected firm will be appointed for a three-year term and given an annual budget of 453 million won ($376,101). Applications are open until October 14, and initial reviews and evaluations are scheduled to be carried out between October 16 and October 21.

Source: Asia Asset Management

MALAYSIA

Malaysia’s Khazanah Nasional is targeting a profit of MYR5 billion ($1.19 billion) this year and a further debt reduction to MYR40 billion in the medium term.

Economic affairs minister Azmin Ali said the sovereign wealth fund had trimmed its debts by MYR8 billion to MYR47 billion this year.

“We must ensure that the assets we sell will generate money as well as new funds for us to re-invest into other assets and make more profits to Khazanah and then give dividends to the government,” he said at the Khazanah Megatrends Forum 2019 On October 7.

Source: The Star

NEW ZEALAND

The Guardians of the New Zealand Superannuation Fund opposed the government's Venture Capital Fund being part of the Super Fund and wanted it established as a separate vehicle with its own investment mandate, chief executive Matt Whineray says.

The Super Fund's investment mandate is to invest to help fund New Zealand's future superannuation needs and "this has slightly different objectives," Whineray told parliament's finance and expenditure committee."You can't serve two masters."

The Super Fund had $43.1 billion in funds under management at June 30 so the $300 million Venture Capital Fund will account for only about 0.7% of its portfolio. While the Super Fund will provide the funds, the New Zealand Venture Investment Fund will select the investment managers the funds will be distributed to.

Source: Scoop

US fuel-cell maker Bloom Energy, into which New Zealand Super fund is a major investor, was labelled an "obvious bankruptcy candidate" by a US analyst at a short-selling brokerage. The sovereign wealth fund invested $100 million in Bloom Energy in 2013 and 2014, but its stake is now worth less than $13m based on Bloom's share price of US$3.25 on October 1.

US analyst Hindenburg Research said its research indicated that Bloom's technology was "not sustainable, clean, green, or remotely profitable". "We believe that large debt maturities in 2020 and 2021, amounting to nearly US$520 million, make Bloom Energy an obvious bankruptcy candidate.

Bloom rebuffed the claims, saying Hindenburg's analysis contained "factual inaccuracies, misleading allegations, and drew erroneous conclusions", including about its future debt repayments.

SINGAPORE

Singapore’s state investment Temasek is looking to up its investments in “aspiring unicorns” to boost returns.

“I would expect even in the next six to 12 months, we'll be doing a few more investments in such companies in Southeast Asia,” said Rohit Sipahimalani, who leads Temasek's startup focus as a joint head of the investment group.

"It's not going to make a material difference in the portfolio in the next one year or two years," he said, "But in the next five years, I expect to see this being a meaningfully larger number just because we see a lot of opportunities out here."

Source: Nikkei Asian Review

Private firm Everstone Capital appointed former Temasek director Vibhor Kumar Talreja as managing director to lead the firm’s investments in the financial services sector.

Talreja was previously involved in the India team of the Singaporean sovereign investor. He led decision making for public and private deals that were over $2 billion each across sectors including industrials and financial services. He will be based in Everstone’s Mumbai office for the role.

Source: Live Mint

TAIWAN

Bureau of Labor Funds (BLF) plans to suspend giving out new investment mandates next year as it undertakes a review of its portfolio.

It outsources investments every year, but said the pace may have been “too fast” for some managers. As such, BLF is putting the exercise on hold for next year in order to “have a thorough review on the diversity of its portfolio”, and to discuss strategies that it lacks with managers and investment consultants, said deputy director general Li-Ju Liu.

Source: Asia Asset Management

THAILAND

The year-to-date growth of Thailand’s pension industry assets reached 7.08% in August as more workers contributed to the non-mandatory fund system targeted at private sector employees.

The industry’s total assets increased to THB1.21 trillion ($39.8 billion) from THB1.13 trillion at the end of 2018, according to figures from Association of Investment Management Companies.

A fund manager at a Thai asset management firm said that the increase can be attributed to the growth of the country’s equity market, which “has been one of the better performers in Southeast Asia this year”.

Source: Asia Asset Management

INTERNATIONAL

The Trump administration is moving ahead with discussions around possible restrictions on portfolio flows into China, with a particular focus on investments made by U.S. government retirement funds, people familiar with the internal deliberations said.

Trump officials have zeroed in on how to prevent US government retirement funds from financing China’s economic rise, the people said. According to people familiar with the meeting, the administration’s focus is now on ways to further scrutinise index providers’ decision to add Chinese firms they consider a material risk for American investors. 

At least one of the issues under consideration is time-sensitive. The Federal Retirement Thrift Investment Board in 2017 made a decision that by mid-2020 the international fund offered to workers in the government’s retirement savings plan would mirror the MSCI All Country World Index, which captures emerging markets, including China. The board is scheduled to meet October 21.

Source: Bloomberg