Insto roundup: QDII set for big expansion; Korea Post plans insurer sale
ASIA
Asian institutional investors are increasingly leveraging technology to improve the pace and efficacy of their investment decisions and manager selection, finds a new report by research house Cerulli Associates.
As more institutions harness data analytics and generate insights to improve returns, deal sourcing and manager selection, asset managers could face tougher selection requirements, expectations and monitoring.
Cerulli’s findings suggest that managing risk-return expectations and fee pressures are the top challenges faced by institutional managers when dealing with asset owners in the region, and the low-yield environment has brought about greater fee scrutiny.
Source: Cerulli Associates
AUSTRALIA
Australia’s pension funds look to be facing greater government scrutiny when it comes to making climate- or infrastructure-related investments, in light of comments by Senator Jane Hume that sparked a backlash from climate campaigners and fund managers.
From July, trustees of hundreds of superannuation funds will face a strengthened obligation to act in the best financial interests of some 16 million members.
Asked how this might apply to funds seeking to meet climate change responsibilities, or to invest in long-term assets such as roads or bridges, Hume said such goals were not the mission of super funds – rather, their purpose was to create an income for retirement.
Source: Financial Times
Hostplus has ramped up its private equity investments with a commitment of over A$1 billion ($713.79 billion) across projects that tackle climate change including a meat alternative.
The A$48 billion fund's annual report outlined investments into medical technology, vegan food, robotics and solar, all of which are aligned with UN Sustainable Development Goals. “Today, and into the future, we believe these assets can deliver investment growth as well as providing an important balance to listed assets, which can often be more volatile," it said.
The fund has invested in v2food, the company behind Hungry Jack's vegan Rebel Whopper burger and its creation of a vegan alternative to animal meat.
Source: Financial Standard
State Super has awarded a China equity mandate to Ninety One (formerly Investec Asset Management), after what it said was an extensive tender process.
Andrew Huang, senior investment manager at the A$44 billion ($30.9 billion) pension fund, said an all-shares approach to China “was the most compelling due to high alpha potential while diversifying beta”.
Source: State Super
CHINA
China will grant additional quota for domestic institutional investors to invest in overseas securities on a regular basis.
The Qualified Domestic Institutional Investor (QDII) quota will be boosted by between $2 billion and $3 billion every quarter, reports Caixin Global, citing an official from the State Administration of Foreign Exchange.
The regulator said it would continue to increase QDII quotas in batches with an annual cap set at $10 billion. The annual cap would represent an expansion of the QDII programme by almost 10%, representing one of the biggest relaxations in capital controls in recent years.
Source: Caixin Global
Ping An Insurance-backed Lufax aims to raise up to $2.4 billion in an initial public offering on the New York Stock Exchange.
The Shanghai-based company offers wealth and asset management services via its online and mobile platform. The listing could potentially be the biggest US listing by a Chinese issuer this year.
According to company’s prospectus filed on October 22, it is selling 175 million American depositary receipts at an indicative price of between $11.5 and $13.5 per share.
Source: Securities and Exchange Commission
INDONESIA
Indonesia will launch its planned sovereign wealth fund (SWF) in January next year as the government seeks to attract more investment and support the economy amid the coronavirus pandemic.
Deputy minister of state-owned enterprises Kartika Wirjoatmodjo said on October 20 the government would soon establish the fund to handle government investments.
SWF observers have told AsianInvestor that the forthcoming fund, to be named the Indonesia Investment Authority, is structured akin to a state private equity fund, as it is primarily gaining its capital from foreign investors.
Source: Straits Times
JAPAN
Government Pension Investment Fund (GPIF) and other pension funds may be driving the surge in China’s purchase of Japanese government bonds (JGBs).
The pension funds have a growing appetite for overseas bonds offering yields that are not available at home. In many cases, that involves Japanese investors buying US dollars from major holders such as those in China, leaving those Chinese accounts with yen that tends to be invested for the short term in JGBs.
Pension funds have driven these Japanese outflows in recent months, with GPIF leading the charge. In the week that ended on October 10, Japanese investors bought about ¥1.9 trillion ($18.15 billion) worth of foreign bonds, according to Nomura – about five times the average weekly pace in 2019.
Source: Financial Times
KOREA
Korea Post is inviting local asset managers to bid on a W60 billion ($52.9 million) domestic venture capital mandate for its insurance unit.
The government postal agency will hire three managers for a period of one year each, according to a request for proposal issued on October 23. The document does not provide details such as minimum asset requirements.
The appointed managers will oversee a blind pool of venture capital funds investing in small- and medium-sized new technology firms. Applications are open until November 4 and evaluation and manager selection are scheduled to be carried out later in the month.
Source: Asia Asset Management
MALAYSIA
Goldman Sachs’s Malaysian division pleaded guilty to charges of bribery as the US bank paid a record $2.9 billion in a global settlement with several regulators over its involvement in a money laundering scandal centred on sovereign wealth fund 1 Malaysia Development Berhad (1MDB).
The US bank had been paid abnormally large fees to help raise $6.5 billion through a series of bond issues from 1MDB between 2012 and 2013, much of which was eventually stolen. Brian Rabbitt, the acting head of the US Department of Justice’s criminal division, said a record $660 million in bribes were paid as part of the looting.
Source: Financial Times
NEW ZEALAND
New Zealand Super chief executive Matt Whineray took a NZ$135,000 ($90,000) hit this year after taking a voluntary pay cut and earning a lower bonus because of the fund's performance.
The annual report for the NZ$44.8 billion fund showed that Whineray received total remuneration of NZ$928,533 in the year to June 30, down from NZ$1,063,910 during the prior financial year.
Source: New Zealand Herald
SINGAPORE
Google and Temasek Holdings have agreed to invest about $350 million (S$475.7 million) in PT Tokopedia, people familiar with the matter said, a major cash infusion that will bankroll the Indonesian e-commerce giant's post-Covid-19 expansion.
The Singapore state investor and the Alphabet subsidiary could sign an agreement for the funding soon, the people said, asking not to be identified. The financing falls short of the initial goal of $500 million to $1 billion that Bloomberg News reported in July, though Tokopedia may still be looking for more investors.
Tokopedia, an online marketplace backed by SoftBank Group, was said to have held talks with US internet giants including Facebook, Microsoft and Amazon. The backing of Google and Temasek is a vote of confidence for one of Indonesia's biggest e-commerce operators, which rode a surge in online shopping during the pandemic.
Source: Straits Times
Speculation is growing over whether Korean internet lender K Bank will gain a capital infusion from Singapore state investment company Temasek as it seeks to grow in order to compete with larger local rival Kakao Bank.
Temasek has expressed interest in investing in internet banks in Korea and other countries, while K bank is desperate to find investors to inject additional capital to normalise its operations.
In July, K bank expanded its capital by W400 billion ($355.24 million) by issuing new shares, with its three major shareholders – BC Card, Woori Bank and NH Investment & Securities – pumping in capital for the lender. It has been keeping in touch with Temasek and other institutional investors for additional recapitalisation and to secure as much as W400 billion in capital.
Source: Korea Times
TAIWAN
Taiwan’s Bureau of Labor Funds hired asset managers for a $2.3 billion corporate bond mandate focused on sustainable investing on October 20. The winning managers were DWS, Insight Investment Management, JP Morgan Asset Management, Pimco and Western Asset.
Each firm will oversee $460 million of investments, split into $400 million for the Labor Pension Fund, and $60 million for the National Pension Insurance Fund, which covers old age and disability protection.
The mandate is benchmarked against the Bloomberg Barclays Global Aggregate Corporate USD ex Controversial Industry Index. The tender was opened in July and each manager has been appointed for a five-year term.
Source: Bureau of Labor Funds
INTERNATIONAL (EXCLUDING ASIA)
Ontario Teachers’ Pension Plan is leading a new $360 million equity investment into Singapore-based Princeton Digital Group (PDG), a data centre investor, operator and developer.
Since its founding three years ago, PDG has built a portfolio of 18 data centres across four countries: China, Singapore, Indonesia and India.
Warburg Pincus, which has been the largest institutional investor into PDG, is also participating in the round of fundraising.
Source: Ontario Teachers’ Pension Plan