Insto roundup: Korean pensions eye infra; a new Aussie future fund
AUSTRALIA
Sydney-based financial services firm AMP announced on October 25 that it will sell off its New Zealand wealth management and advice business after completing a review of its business portfolio. The firm intends to launch an initial public offering (IPO) in 2019 for the wealth management and advice business, which had fiscal year 2018 earnings of about $28.3 million.
The portfolio review was conducted in order to strengthen AMP’s balance sheet and provide greater strategic flexibility. AMP will also sell its Australian and New Zealand wealth protection and mature businesses to insurer Resolution Life for $2.3 billion.
Source: AMP
Australian insurer Insurance Australia Group (IAG) launched its expanded climate action plan at its annual general meeting on October 26, including the implementation of a scorecard that assigns direct accountability for climate change to senior executives. IAG’s climate action plan involves five key impact areas, including responsible investment. The insurer enacted an ESG and climate risk management approach for equity portfolios in fiscal year 2018, and thus far it has invested in about $49.6 million in green bonds and put around $35.4 million of financing in National Australia Bank’s low carbon shared portfolio this year.
Source: IAG, IAG Climate Action Plan
Brisbane-based superannuation fund LGIAsuper published its “find my super” tool on October 22, allowing members to track down all superannuation funds held outside of their LGIAsuper account and then combine those funds together under LGIAsuper. As of October 11, Australian residents had about $12.4 billion in lost and unclaimed super funds, according to the Australian Tax Office (ATO). The ATO also said that about 39% of Australians with a superannuation account had multiple accounts, which means many Australians are paying multiple fees and insurance premiums.
The Australian government announced its proposed Future Drought Fund on October 25, a $3.5 billion fund intended to help farmers prepare for future droughts through investments in community services, research, technology, water infrastructure, and drought resilience projects. The initial commitment from the government will be $2.8 billion, reaching $3.5 billion by 2028. Money for the fund will come from the dormant Building Australia Fund, set up in 2009 to finance capital investment in transport, communications, energy, and water infrastructure.
Source: ABC
CHINA
China Investment Corporation (CIC) has signed a memorandum of understanding (MOU) with Nomura Holdings and other financial institutions in Japan as part of a strategic alliance to establish a Japan-China industrial cooperation fund.
Other financial institutions in the MOU are Daiwa Securities, Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group.
The fund aims to enhance bilateral trade and investment relations between China and Japan by investing in Japanese companies seeking to expand their businesses into China, as well as Chinese companies and companies from other third-party countries. It will involve the setting up of a fund management company.
Source: Nomura announcement
JAPAN
Japan Post Insurance plans to increase its holdings of currency-hedged foreign bonds and trim those of domestic debt in the half year through March 2019, investment planning officials said. In the six months to September, Japan Post Insurance raised its exposure to foreign currency bonds and cut its domestic bond allocations, and it intends to continue doing this, said officials.
While it is focusing on US corporate bonds, the rising cost of hedging dollar investments back into yen has also led it to seek out opportunities in Europe, where the hedging costs are far lower. The insurer is also looking for alternatives investments, in private equity, hedge funds and real estate, both internally and via Japan Post Investment Corp, said the officials.
Source: Reuters
Foreign private equity managers can thereby overcome the prejudice they face in Japan, Masaaki Tanaka, JIC’s chief executive, told Reuters. The aim is to boost Japan's competitiveness, he noted.
JIC also wants to create a venture capital fund, a fund that targets overseas firms, and an engagement fund that would own about a 5% stake in companies. The investment firm has taken over the role of the Innovation Network Corporation of Japan, a state-backed fund set up to accelerate growth of domestic companies.
Source: Reuters
The insurance company, which focuses on property insurance but also offers life and health insurance too, aims to invest into startup companies in the fields of insurance technology, mobility, health, eldercare, homecare, remote medical care, blockchain, internet of things and cyber. It will mark Sompo’s third such innovation lab after Tokyo and Silicon Valley.
Source: Reuters
The Korean Teachers Credit Union (KTCU) and Korea Teachers Pension (KTP) intend to raise property and infrastructure investments into Asia and other emerging markets, to help achieve their 5% annual investment return targets. Meanwhile the Public Officials Benefit Association (Poba) is targeting infrastructure investments, particularly in developed markets, according to remarks from chief investment officers at the three funds at the ASK 2018 Real Estate & Infrastructure Summit in Seoul on October 23.
Kang Sung-seog, CIO for KTCU, noted that it is “highly likely” that it would raise real estate and infrastructure investments, identifying logistics in Asia as of particular interest, such as retail and multi-family assets in China and Indonesia. He added that given external uncertainties, mezzanine investments “are likely to remain attractive for a while”.
Park Dae-yang, CIO of KTP, said his fund’s target return project based investment was 5.3%, and said the fund would keep raising investments in Asia alongside private equity general partners, and it was “preparing to diversify into infrastructure debts”. And Jang Dong-hun, Poba’s CIO, noted that his fund was also adding real estate debts, after previously focusing most on equity investments over the past three years.
Source: Korean Investors
Korea Investment Corporation (KIC) will look to more emerging markets for investments and consider adding to real estate debts to diversify its portfolio, said chief executive Choi Heenam, speaking at the ASK 2018 Real Estate & Infrastructure Summit on October 23. Additionally, KIC director Lee Chung-hyun said at the same event that KIC is adding co-investment and direct investments into infrastructure programmes, in particular investing into telecommunications-related deals this year.
Choi said KIC was looking at housing real estate in Europe and logistics centres in Asia as other areas of investment opportunity.
Source: Korean Investors
KIC is also in discussions to buy logistical warehouse assets in Europe from e-tailer Amazon. The portfolio of three multi-storey warehouses would cost approximately Eu400 million.
Source: Sovereign Wealth Fund Institute
Korea Post is planning to select two energy infrastructure funds within the year as it looks to raise exposure to global infrastructure assets, according to Lee Jinho, head of global real estate assets for the asset owner, speaking at the ASK 2018 Global Real estate & Infrastructure Summit. The mandates would follow Korea Post’s $500 million commitment to two blind-pool infrastructure funds in May for equity investments into global infrastructure assets. Alternatives comprise about 6% of Korea Post’s W110 trillion ($96 billion) in assets.
Source: Korean Investors
NEW ZEALAND
New Zealand Super Fund released its September 2018 results on October 24, growing its assets under management (AUM) by 0.9% from August 2018 and 13.1% year-on-year. Total AUM reached $41.1 billion in September, and returns for the month were 0.45%, down from 1.07% in August.
Source: NZ Super Fund
THAILAND
Government Pension Fund (GPF), Thailand's largest pension pot, launched a new environmental, social and governance (ESG) focused portfolio to buy into local stocks. The new investment portfolio is worth Bt1 billion ($30.13 million) and will invest into 33 local companies found on the Thailand Sustainability Investment List.
Vitai Ratanakorn, secretary-general of GPF, said it was the first ESG fund in Thailand, and hoped that GPF would be a leader in ESG investing. The fund's purpose is to improve returns while reducing financial and reputation risks. It also intends to raise the inital size of the portfolio in 2019, he added.
Source: The Nation
INTERNATIONAL
The International Centre for Pension Management (ICPM) has issued a paper on climate change and the difference it makes for investments. This has gone from being a niche issue to one with potentially major financial consequences for all investors, argues the Toronto-based body.
The document was put together by a working group of 10 pension schemes. It includes one from Asia Pacific (New Zealand Super Fund), along with British Columbia Investment Management Corp, Caisse de Dépôt et Placement du Québec, Canada Pension Plan Investment Board, Ontario Teachers’ Pension Plan, OPTrust, PGGM, Unilever Pension Plan (to 2017), Universities Superannuation Scheme and World Bank Pension Plan.
Source: ICPM
Sacramento County Employees’ Retirement System is monitoring its investments in Chinese property after The Carlyle Group recently revealed plans to spin off its Asian real estate business. The pension fund, which has three commitments to Chinese real estate strategies managed by Carlyle, is putting the asset manager on watch, according to a board meeting report.
Source: I&PE Real Assets