Insto roundup: State funds’ M&A splurge; Kyobo Life eyes offshore assets
AUSTRALIA
First State Super signed a global equities partnership with HSBC Global Asset Management, in which the fund house manages an initial $500 million investment by the Australian superannuation fund into a global multi-factor mandate, as well as offering research and modelling support to FirstState's internal investment team.
The purpose of the model is to support First State's internal investment team as it expands its capabilities to manage international shares. Essentially HSBC GAM will support the decision-making of the A$100 billion ($67.5 billion) pension fund's team.
Source: HSBC Global Asset Management
Australia’s $2.9 trillion superannuation sector, and some of the country’s largest listed companies, are fast raising their offshore exposure, boosting Australian ownership of foreign equities by 27% to $1.5 trillion in the past two years.
This shift has also eased, to some extent, the nervousness some Australians have about foreign ownership of assets. It has also given the nation greater clout in the global investment market, says Karl Morris, chairman of superannation fund QSuper.
Source: Australian Financial Review
Foreign institutional investors (both asset owners and managers) have increased their holdings in China bonds for 10 consecutive months as of September, according to the China Central Depository and Clearing (CCDC) Company.
The scale of China bonds that were in CCDC’s custody stood at Rmb1.79 trillion ($254 billion) in September, while the net increase in holdings were Rmb70.67 billion in September. The net capital flows into the China interbank bond market was Rmb110.8 billion in the month.
Source: Securities Times
JAPAN
Government Pension Investment Fund (GPIF) and African Development Bank (AfDB) have started a partnership that aims to strengthen capital market cooperation to promote environmental,social and governance (ESG) integration into fixed income investment.
AfDB issues Green and Social Bonds that align with the International Capital Market Association (ICMA) Green bond Principles and Social bond Principles that contribute to make a sustainable society. Investment opportunities into these bonds will be provided to GPIF's asset managers.
Source: GPIF
Norihiro Takahashi, president of GPIF, said that asset management companies should look into nonfinancial information about their investees to find out what said investees are really aiming for.
“We try to encourage enterprises to include ESG factors in their corporate strategies,” Takahashi said at a forum on the topic September 26 in Tokyo, adding: “As GPIF does not make direct investments, we are particularly concerned about how ESG indexes are structured, who the index providers are, and the transparency of the indexes.”
Source: Japan Times
Tokio Marine has agreed a $3.1 billion deal to acquire US insurer Pure Group. The Japanese insurer is acquiring the US firm from private equity groups, KKR and Stone Point as Japanese insurers look to expand their horizons as the domestic population shrinks.
Pure Group will come under Tokio Marine’s umbrella in the financial year ending in March, according to reports.
Source: Fund Global Asia
Japan Post Holdings said October 7 that it has acquired an equity stake of over 5% in US insurance giant Aflac. The move is part of a plan by Japan Post, announced in December last year, to acquire a stake of about 7% in Aflac by the end of fiscal 2019, which ends in March 2020.
Japan Post plans to raise its voting rights in Aflac to over 20% in four years as the US insurer's articles of incorporation stipulate that each share is entitled to 10 votes after four years of continuous holding.
Source: Jiji Press
Japan Post Bank is shifting more of its investments in risky US corporate debt away from investment funds and into vehicles that offer a cushion against losses in a downturn, according to a person with knowledge of the matter.
The postal bank will increase its investment in collateralised loan obligations (CLOs), which bundle together US loans made to highly leveraged companies, said the person, who asked not to be identified.
Source: Bloomberg
Reliance Nippon Life Asset Management, Nippon Life Insurance of Japan is open to more acquisitions in the Indian mutual fund industry, after having taken a 75% stake in its Indian joint venture, Reliance Nippon Life Asset Management.
Minoru Kimura, head of Asia Pacific at Nippon Life Insurance, said: "If there is a good opportunity to extend our capacity into new areas, or new asset class we are very much open to inorganic growth."
He was quick to add that Nippon Life will not make the acquisition for the sake of buying but the company should add significant value to their existing business. The Japanese insurer is changing the name of the subsidiary to Nippon India Mutual Fund.
Source: MoneyControl
KOREA
National Pension Service (NPS) has been criticised for expanding investment in 'sin stocks', toxic humidifier steriliser producers and Japanese companies involved in Japan's wartime slave labour, according to lawmakers October 10.
A report given by NPS to Rep. Nam In-soon of the ruling Democratic Party of Korea ahead of a National Assembly audit showed the state pension fund's investments in Japanese companies connected to wartime forced labour rose to W1.52 trillion ($1.2 billion) in June from W760 billion in 2014.
Source: Korea Times
A South Korean market tracker said on Sunday (October 13) that the stock value of South Korea's national pension fund, NPS, has increased by 16% in the starting nine months of the year.
The total value of shares in the top 10 conglomerates accumulated $63.9 billion at the end of September, increasing 16.4% from the end of the previous year. NPS stood at an average of 8.23% stake South Korea's top 10 family-controlled business groups, increasing 0.4% in the period.
Source: MENAFN, Korea Bizwire
South Korea's financial regulator said on Thursday (October 10) it would delay a plan to bolster capital rules on insurance firms, in line with a one-year delay of implementing tougher global accounting standards for insurers.
South Korea is one of more than 100 nations that will adopt the new global bookkeeping standard, or International Financial Reporting Standard 17, starting in January 2021. Insurance firms, however, get a 12-month delay on implementing the new rules after the global insurance industry called for more time to adopt to the change.
Under the new rules, insurers' liabilities will be assessed on the basis of their market value rather than book value. It is aimed at enabling a fairer assessment of insurers' ability to withstand stress and to have a larger capital base and reserves to cover potential losses.
Source: Yonhap News Agency
Kyobo Life, South Korea’s third largest life insurer, plans to boost overseas investments to almost a third of total assets, joining the growing ranks of investors that are taking more risks as bond yields decline.
Kyobo Life will raise its holdings in US and European properties and renewable energy projects, and may also buy emerging-market debt, said Cho Hwi-Seong, head of the asset portfolio management team. The plan is to boost overseas investments to 30% of total assets, the maximum allowed under the law, he said.
Source: Bloomberg
MALAYSIA
Malaysian sovereign wealth fund Khazanah Nasional has said it will go by the government’s decision on the various acquisition proposals received by toll road operator Plus Malaysia. Khazanah said Plus Malaysia, which has attracted interest from various parties, has submitted its own proposal to the Malaysian government.
“It is up to the government to consider these proposals and decide what is best for the country and the people,” said a Khazanah spokesperson. Khazanah holds 51% indirect ownership in Plus through its 100% owned subsidiary UEM Group, while the Employees Provident Fund owns the rest, according to the company’s website.
Source: Deal Street Asia
SINGAPORE
Summit Hotel Properties announced on October 10 that it had agreed to acquire four hotels located on the west coast of the US for
The portfolio is located in three high-growth markets and includes the 258-guestroom Residence Inn by Marriott Portland Downtown/RiverPlace, the 169-guestroom Hilton Garden Inn San Francisco Airport North, the 161-guestroom Hilton Garden Inn San Jose/Milpitas, and the 122-guestroom Residence Inn by Marriott Portland Hillsboro.
Source: Summit Hotel Properties
Singapore’s Temasek Holdings has decided against investing in Saudi Aramco’s initial public offering, in part over environmental concerns, according to people familiar with the matter.
The world’s most-profitable company first flagged a public share sale in 2016 and is expected to list with a valuation of between $1.1 trillion to $2 trillion later this year. It’s been courting funds globally to act as cornerstone investors, including Temasek, which had a net portfolio value of S$313 billion ($227 billion) as of March 31.
Source: Bloomberg
INTERNATIONAL
State-backed investment funds increased their merger and acquisition activity to $24.6 billion in the third quarter, propelled by deals involving Singapore's GIC and Temasek Holdings as well as China Investment Corporation.
Such funds were involved in 49 announced deals, up from 46 with a total value of $15.5 billion in the previous quarter, according to data from Refinitiv. The bumper second quarter total was the highest since the $35.8 billion hit in the second quarter of 2018.
The fourth quarter is also gearing up to be a bumper period for deals, with Abu Dhabi Investment Authority's Sfr10.2 billion ($10.25 billion) deal to buy Nestle's Nestle Skin Health in October.
Source: Business Times
US institutional investors are starting to catch up on incorporating environmental, social and governance (ESG) factors into investment processes, according to investment consultancy Callan’s seventh annual ESG survey.
Four in 10 (42%) US institutional investors incorporated ESG factors into their investment decision-making processes in 2019. Since the survey’s launch (2013), there has been a 91% increase in respondents incorporating ESG factors into investment decisions, and 62% had begun ESG investing in the past five years.
The survey polled 89 institutions and reveals an ongoing disparity in ESG adoption rates by investor type and size. Historically, non-profits have had the highest ESG adoption rates, while public plans have incorporated ESG factors at a higher rate than their corporate counterparts.
Source: Opalesque
European institutional investors are raising their exposure to Asia-Pacific property typically to benefit from the populous region’s diverging core strategies, delegates at Expo Real heard during a panel session.
The panelists – Rushabh Desai of Allianz Real Estate, KaiLong’s Hei Ming Cheng, Carsten Kebbedies of Nuveen Real Estate, Ng Chiang Ling of M&G Real Estate and Invesco Real Estate’s Calvin Chou – agreed on this trend.
Chou said European institutions were above all seeking diversification from Asian real estate, which provides a level of downside protection. Meanwhile, Desai said it was a misnomer to think Asia is a place for high returns, and it should rather be viewed “as a place with secular growth”.
Source: IPE Real Assets