Insto roundup: Sunlife eyes Asia acquisitions; NPS to apply ESG to $380b AUM
ASIA
Canadian insurer Sunlife is set to ramp up acquisitions in Asia to build scale in its existing markets, its chief executive said on Thursday (September 10).
“We continue to look for opportunities, whether it’s (bancassurance) or acquiring other insurance businesses in Asia to give us more scale in the markets in which we already operate,” chief executive Dean Connor said at the online Scotiabank Financials Summit. “We’re happy with the eight markets we’re in now.”
Sun Life operates in China and Hong Kong, the Philippines, Japan, Indonesia, India, Singapore, Vietnam and Malaysia in Asia. The insurer is also interested in opportunities in a consolidating market in the US, Connor said.
Source: Reuters; Insurance Business
AUSTRALIA
Cbus allocated investment funds to provide direct debt and investing directly in Australian companies. These investments aim to deliver both returns and help with the preservation and creation of jobs in building and construction as well as the broader Australian economy.
Since March 2020, approval has been given for debt funding totalling A$260 million ($190 million) for three separate residential construction facilities: Cbus has also provided over A$240 million in debt funding directly to Australian companies since March 2020.
In addition to debt funding, Cbus has invested over A$450 million in Australian businesses to assist with capital they need to keep operating and keep employing.
Source: Cbus Super
UniSuper recently added about A$300 million to its allocation to Tribeca Alpha Plus Fund and now has a total of roughly A$630 million invested via the fund.
Tribeca Alpha Plus has been running since 2006 but had a rough start to last year, as returns stalled and Liu's long-standing co-portfolio manager Sean Fenton left to start a new boutique, called Sage Capital.
UniSuper stuck with Tribeca through the leadership changes and last year's underperformance, after allocating to the Tribeca strategy since late 2017.
Source: Financial Standard
CHINA
Chinese insurers are now allowed to invest in convertible bond investment plans issued by financial investment firms that have quality corporate governance and prudent operations.
Such investment vehicle should have at least 60% of the assets invested in convertible bonds. Other underlying assets can be large deposit certificates and standardised debts. An insurer’s investment in a single convertible bond investment plan should not exceed 50% of the plan’s scale, among other requirements.
Source: CBIRC
China-led Asian Infrastructure Investment Bank (AIIB) and French asset manager Amundi have launched the AIIB-Amundi Climate Change Investment Framework to holistically assess climate change risks and opportunities.
It works in line with the three objectives of the Paris Agreement at the issuer-level, which are equipping investors with a new tool to assess an issuer’s level of alignment with climate change mitigation, adaptation and low-carbon transition objectives.
Source: AIIB
INDONESIA
Indonesia is moving closer on creating a strategic development sovereign wealth fund (SDSWF) similar to India’s National Infrastructure Investment Fund (NIIF).
The Southeast Asian country is keen on luring foreign institutional investors to partake in the country’s much needed infrastructure. Areas of development that could be beneficial for long-term asset owners include toll roads.
Source: SWF Institute
KOREA
The National Pension Service (NPS) is seeking to incorporate environmental, social and governance (ESG) criteria into domestic equity and bond investments worth W450 trillion ($378.7 billion) in a move to boost responsible investments and enhance long-term gains.
Domestic investments accounts for almost 60% of NPS's W752.2 trillion of AUM, which posted a record-high return of 11.31% as of December 2019.
Sectors related to tobacco, gambling, and coal power, among others, are likely to be crossed off as they are not in line with ESG criteria while NPS holds nearly 10% stake each in alcohol beverage manufacturer Hite Jinro, tobacco company KT&G, and casino operator GKL.
Source: Korean Investors
National Pension Service, the world’s third largest pension fund, is predicted to post a net loss by 2040, urging the need to adopt dramatic changes to cope with the demographic trends and funding shortfalls, according to a report from Ministry of Economy and Finance.
Analysis and data show that the pension fund would reach total insolvency by 2056 and starting from 2029, the state retirement for teachers is expected to lose money and would run out of cash by 2049. The country will have to pour W16.43 trillion ($13.88 billion) into NPS to offset this loss. Massive job losses triggered by the Covid-19 pandemic have also raised the pressure on social insurance at the same time.
Source: Pulse by Maeil Business News Korea
The global economic uncertainties resulting from Covid-19 led Korean institutional investors to become very conservative on working with external partners, as more due diligence is required for cross-border deals and proper valuation.
Lee Jang-hwan, representative from Lotte Non-Life Insurance said that for the time being it would focus on the relationship with top-tier general partners by the size of assets they were managing and their track records, on Infrastructure Investor Seoul Summit Virtual Experience 2020. He added that ““It is hard to convince investment committee members especially for new general partners.”
Nevertheless, most institutional investors are also forced to reassess the valuation of stable assets due to a price gap between proposed buyers and sellers, and some of them began to turn to global assets in the sectors such as renewable energy and digital infrastructure.
Source: The Investor
MIDDLE EAST
Middle East sovereign wealth funds (SWFs), including Abu Dhabi Investment Authority and Saudi Arabia’s Public Investment Fund, are in talks to buy stakes in India’s Reliance Retail, which is seeking to raise $5.7 billion by selling new shares.
Adia is in discussions about an investment of $750 million, valuing the firm, part of Indian billionaire Mukesh Ambani’s empire, at roughly $57 billion, according to people familiar with the matter. The PIF could funnel as much as $1.5 billion into the entity controlled by Ambani’s oil-to-telecoms conglomerate Reliance Industries. Another Abu Dhabi SWF, Mubadala, may also take a stake.
The new round of fundraising comes just weeks after Ambani, Asia’s richest man, secured $20 billion in investments for his digital business Jio Platforms from 13 global investors. Some of these investors were offered the first opportunity to invest in the retail business.
Source: Financial Times
NEW ZEALAND
The former QSuper chief and the current chair of Commonwealth Bank's staff superannuation fund was appointed to the board of the New Zealand Super Fund for a five-year term.
Rosemary Vilgan will join the board of guardians for NZ Superannuation Fund starting October 1. She replaces Stephen Moir, who is rotating off the board, after serving since 2009. Moir's past roles have included general manager of the Westpac Institutional Bank for three years.
Vilgan currently is the chair of CBA's staff superannuation fund and chair of the federal government's safety, rehabilitation and compensation commission (from which she will step down in October).
Source: Financial Standard
Despite delivering single digit returns, the NZ Super Fund managed to outperform the average returns of Australian MySuper products and the Future Fund.
The sovereign wealth fund recorded a return of 1.73% for the year ending June 30 underperforming its benchmark reference portfolio which returned 3.82%. Its assets stood at NZ$44.8 billion ($28.8 billion) at the end of June.
Comparatively, Australian MySuper products delivered an average return of -0.9% last financial year according to the Rainmaker MySuper investment performance index. In addition, $161 billion Future Fund posted the same return over the same period.
Source: Financial Standard
SINGAPORE
Singapore Life has merged with Aviva Singapore, representing a combined S$3.2 billion ($2.34 billion) deal value. The transaction is subject to closing conditions and is expected to complete by January 2021.
The newly merged business will initially be named as Aviva Singlife where Aviva, Sumitomo Life Insurance and alternative asset firm TPG will retain a respective 25%, 20% and 35% shares in the group.
Aviva Singapore insures about 1.5 million customers and manages S$11.8 billion of assets. It owns a trust platform, Navigator, as well as two of the largest financial advisory firms in Singapore.
Source: Fintech News
Temasek Holdings is considering an investment in the initial public offering (IPO) of Chinese financial technology company Ant Group, which could be the world's biggest IPO, two people familiar with the matter said.
Singapore sovereign wealth fund GIC is also considering investing in the IPO, said one of the people.
Ant, backed by Alibaba Group Holding, plans to list simultaneously in Hong Kong and on Shanghai's Nasdaq-style Star Market, and raise as much as $30 billion, Reuters has reported.
Source: Straits Times
Temasek, GIC and Ant declined to comment.
INTERNATIONAL
Assets under management (AUM) of the 300 largest pensions funds increased 8% to $19.5 trillion in 2019 globally, reversing the 0.4% dip in 2018, according to a report from Willis Towers Watson’s Thinking Ahead Institute.
North America accounted for 43.8% of the assets while 26.6% are held by funds in the Asia-Pacific, followed by Europe with 25.8% of the total AUM. The 20 largest pension funds accounted for nearly 40.7% of the total AUM which saw their aggregate worth rise 8.1% in 2019, representing a 5.5% five-year compound annual growth. Equities investment sit top among all asset classes with a 45.4% weighted average while 36.8% were in fixed income and 17.8% in alternatives and cash. More than half Asia Pacific funds allocated their assets into fixed-income investments.
Japan’s Government Pension Investment Fund remained the largest institution, with $1.55 trillion in assets under management, while China’s National Social Security Fund ranked seventh with an estimated $361 billion AUM.
Source: Willis Towers Watson
Countries coping with the coronavirus crisis and a slump in commodities prices are dipping into sovereign wealth funds for more than $100 billion, and that figure could swell as budget pressures mount for some emerging markets.
24 withdrawals totalling $137 billion include heavy drawdowns of savings or development funds in Bahrain, Kuwait, Iran and Angola, according to research house Global SWF.
That is still fairly small compared to the roughly $9 trillion in total assets managed across all funds. But the scale of the crisis means there is likely to be pressure for more withdrawals, even as questions arise about how and when such funds might be replenished.
Source: Reuters
Canada Pension Plan Investment Board has promoted its former head of real assets to become its first dedicated chief investment officer, a role created to “address the anticipated size and scale of CPP Investments by 2025 and beyond”, said the retirement fund in a release on September 9.
As the new CIO, Edwin Cass “will work closely with the chief executive, the chief financial and risk Officer and investment department heads to strengthen CPPIB’s investment governance even further with the aim of generating greater performance gains”. He will continue to report to the CEO.
Deborah Orida, formerly global head of active equities, succeds Cass as head of real assets. CPPIB said it would announce a replacement for her in due course after an internal selection process.
Source: CPPIB