Insto roundup: Indonesia’s SWF plans; GPIF suspends vote lending

AUSTRALIA

AustralianSuper, the nation’s largest superannuation fund, has formed a partnership with Canadian pension giant Caisse de depot et placement du Quebec (CDPQ), targeting infrastructure deals spanning Australia and overseas, as they look to use their combined investment clout against a backdrop of ultra-low interest rates.

The $180 billion AustralianSuper and $350 billion CPDQ recently formed the alliance and will consider a range of opportunities from direct equity stakes to financing opportunities.

Source: Australian Business Review

Superannuation funds Hesta and First State Super partnered with independent infrastructure manager Palisade Investment Partners to acquire South Australian wind farm Snowtown 2, which is capable of generating enough power for 140,000 homes.

CHINA

The China Banking and Insurance Regulatory Commission (CBIRC) revised a regulation on December 6 to allow foreign entities to own 51% in life insurance joint ventures. This move is in preparation for the scrapping of the foreign ownership limit next year. It is part of Beijing’s thrust to further open up China’s finance industries to foreign investment.

The revised version also eliminated requirements on foreign insurance firms to have set up representative offices for two years in China and have stayed in operation in insurance for 30 years before they enter the Chinese market.

This means that branches of foreign-invested insurance firms are now subject to the same set of regulations as fully Chinese-owned ones, the report said.

Source: Xinhuanet, Insurance Business Mag

INDIA

India’s sovereign wealth fund, National Investment and Infrastructure Fund (NIIF), and Canada Pension Plan Investment Board (CPPIB) have announced an agreement in which CPPIB can invest up to $600 million through NIIF Master Fund. It comprises a $150 commitment in the master fund and co-investment rights of up to $450 million.

The master fund invests equity capital in India’s core infrastructure sectors, including transportation and energy assets.

CPPIB has joined a consortium of investors in the master fund, such as Abu Dhabi Investment Authority, AustralianSuper, Ontario Teachers’ Pension Plan, Temasek, Axis Bank, HDFC Group, ICICI Bank and Kotak Mahindra Life Insurance.

Source: Swarajya

INDONESIA

Indonesia is planning to set up a sovereign wealth fund to support local start-ups and boost economic growth. It is also expected to help overly indebted small and medium enterprises.

The government has yet to finalise the size of the fund, according to people familiar with the matter, but the authority's previous statements on the potential size of any sovereign wealth fund suggested a size of up to $10 billion.

The proposal is backed by three ministries: the ministry of finance, the investment ministry and the ministry in charged of state-owned enterprises.

Source: Financial Times

JAPAN

The Government Pension Investment Fund (GPIF) has decided to suspend share lending its foreign equity assets to short sellers, as it considers the practice to be too opaque and incompatible with its responsibilities as a long-term investor.

In a statement on the decision, GPIF said that the fact that securities lending includes a title transfer element effectively creates a gap in the period in which the stock is held by GPIF, which can be considered to be inconsistent with the fulfilment of the stewardship responsibilities of a long-term investor.

The fund expressed concerns that its programme lacked the transparency required to know who the ultimate borrower was what they were doing with the assets. GPIF had $381 billion invested in foreign equities as of March 2019, making it the world's largest pension fund. The fund will continue to lend its government debt assets.

Source: GPIF

A combination of ever lower bond yields and elevated costs have seen Japanese life insurers cut their hedges on dollar investments to the lowest in at least 10 years, according to calculations by Bloomberg. Despite holding $354 billion in dollar-denominated assets, nine of the biggest insurers had hedged just $164 billion of them against a decline in the greenback, the data as of the end of September showed.

The steady reduction of protective bets against adverse dollar moves comes as elevated hedging costs turned Treasuries into negative-yielding debt for Japanese investors. While the carry-trade like strategy adopted by life insurers will boost returns, a sudden surge in the yen will leave them with big capital losses.

Source: Bloomberg

KOREA

MG Korean Federation of Community Credit Cooperatives (KFCC) will allocate a total of W7 trillion ($6 billion) to alternative investment blind-pool funds for the next three years, with 75% of its committed capital likely to be funneled into global assets, its credit business head Kwang-Seok Kwon said on December 4.

The planned allocation represents 10% of assets under management at the community bank and a significant step forward to diversify its fixed income-heavy portfolio of which global investments account for only 5%.

KFCC has been banned from contributing to blind-pool funds since 2012 by the Ministry of the Interior and Safety (MOIS) which oversees the community bank, after it incurred valuation losses from a domestic real estate fund in the wake of the 2008 global financial crisis.

Source: Korean Investors

The National Pension Service (NPS) said on December 4 it had picked five investment houses and earmarked some W200 billion ($167.6 million) for its investment in startups, in a move to increase exposure to alternative assets.

Knet Investment Partners, Premier Partners, IMM Investment, K2 Investment and SV Investment will become general partners for the venture fund. The result came three months after the public notice calling for request for proposals, mainly to domestic venture capital firms.

In the meantime, NPS this month will also announce a partner for W100 billion co-investment funds to invest in real estate assets in Korea.

Source: The Korea Herald

Korea’s Public Officials Benefit Association (Poba) earmarked W1.2 billion ($100.8 million) to invest in three local private equity funds, according to an announcement.

Poba has opened the request for proposal to domestic blind-pool funds, seeking to invest in up to three managers. Eligible fund managers must have a fund size of at least W200 billion and a minimum of five years of operation in the private equity industry.

Poba said it will not consider venture capital funds investing in start-ups. The Korean pension fund will conduct a second evaluation in January 2020 and announce its decision in the following month.

Source: Deal Street Asia

Korea Development Bank (KDB) originally planned to complete the sale of KDB Life Insurance within this year, but the plan has been delayed to early 2020 as a result of other attractive companies such as Prudential Life being put up for sale.

KDB has promoted the sale of KDB Life since early this year. Originally, the bank planned to invite tenders in November and select a preferred bidder and finalise the sale process in December. But now it will select a preferred bidder this month and finish negotiations with it by early next year. 

Source: Business Korea

Loans by insurance companies in South Korea rose 4.6% in September this year from a year earlier, data showed on December 3. Outstanding lending by insurance firms totaled 229.3 trillion won ($193 billion) as of Sept. 30, compared with 219.1 trillion won during the same period of last year, according to the data released by the Financial Supervisory Service.

Non-performing loans amounted to 445.9 billion won at the end of September, down 175.9 billion won from the end of June.

Source: Yonhap News Agency

AIA Korea has appointed Peter Chung, director of regional business development covering Thailand and Korea, as its new chief executive officer, the company said on December 6. Chung, who will replace outgoing CEO Cha Tae-jin, will take office on January 1 2019.

The company said that Chung has a good understanding of the Korea insurance market, an expertise gained after having served as the chief strategy and marketing officer at AIA Korea from April 2016 to November 2017.

Source: Korea Times

Hanwha Life Vice president and CEO Cha Nam-gyu tendered his resignation, citing the need for a generational shift. The local insurer announced Monday via DART – the Financial Supervisory Service’s electronic disclosure board – that he has stepped down after nearly nine years of overseeing the management.

Following his resignation, Hanwha Life will drop its co-CEO system. Co-CEO Yeo Seung-joo will lead the company, while Cha will remain as an adviser. He previously served as CEO of Hanwha Investment & Securities in 2016 and was. appointed as an executive of strategic planning at Hanwha Life last year. He was named co-CEO in March this year.

Source: The Korea Herald

THE PHILIPPINES

The Philippines’ state pension fund, Social Security System (SSS), has announced that more than 60,000 Filipinos in South Korea will be eligible for the benefits of social security coverage and protection from both their host and mother countries after the two countries signed a bilateral agreement.

“After almost 15 years, we are very glad that we have finally secured an agreement with South Korea that will ensure the protection of social security rights for the benefit and welfare of the respective nationals of both countries,” SSS president and chief executive Aurora Ignacio said.

The Social Security Agreement that will address social security coverage of Filipinos in South Korea and Koreans in the Philippines was signed on the sideline of President Duterte’s visit to South Korea, along with four other agreements.

Source: Business Mirror

INTERNATIONAL

Canada’s biggest pension fund manager Canada Pension Plan Investment Board (CPPIB) could put substantial chunk of its funds earmarked for emerging markets in China, India and Brazil in the next five years.

CPPIB plans to put 33% of its funds in emerging markets by 2025. India, China, and Brazil are big emerging markets for the fund manager, said Mark Machin, president and chief executive officer at the Canadian pension fund. Currently, about 23% of its total assets $410 billion) are in Asia, but it plans to take its total assets to $545 billion by 2025. 

Source: Business Standard

CPPIB is also looking to launch a private debt investment platform along with an Indian partner in next few weeks, said a senior executive of the firm. “We have made the decision that we will allocate capital in the private debt market (in India) and that analysis is over,” said Vikram Gandhi, senior advisor for the pension fund. 

The private debt platform will include investment in stressed assets, but rather than coming in as an equity player it will look at investing in these assets as part of its debt strategy.

Till date, CPPIB has invested CA$10.6 billion in India in sectors such as renewable, infrastructure, real estate and recently, in technology. Over the past year, theit invested in technology companies such as ed-tech firm Byju’s and logistics service provider Delhivery.

Source: Forbes India

Employees System of Texas committed $100 million to a new Asia-focused private equity fund by KKR. It revealed on December 3 that it had invested in the KKR Asia Pacific Infrastructure Investors fund, the first infrastructure-focused fund from the US private equity company. 

Source: Infrastructure Investor