Insto roundup: SWFs shun UK; FWD eyes Thai purchase
AUSTRALIA
Hostplus will invest in emerging private equity firms through Flexstone Partners, an investment firm owned by Natixis.
The Australian superannuation fund will team up with Flexstone Partners to launch a US private equity emerging managers programme, in which Flexstone Partners will invest on behalf of Hostplus in the first, second or third-time funds of mid-market private equity managers in the US.
Sam Sicilia, chief investment officer of Hostplus, said, “For Hostplus, developing and maintaining long-term partnerships with investment managers is critical to securing privileged access to successor funds and future deal flow.”
Source: Institutional Investors, Deal Street Asia
CHINA
Yi Gang, governor of the People’s Bank of China, said in a forum that foreign financial service firms should be treated exactly the same as domestic ones are when it comes shareholding patterns, their scope of business and licenses.
The central bank also said it will focus on providing more hedging tools in 2019 to help investors manage risks as the country seeks to further open the financial sector to foreign institutions.
Source: Bloomberg
HONG KONG
The legislative council passed a bill on March 20 to allow tax deductions for premiums paid to qualifying deferred annuities and contributions made into voluntary contribution accounts under the Mandatory Provident Fund (MPF).
The maximum tax-deductible limit is $60,000 each year per taxpayer.
Source: Hong Kong government
Hong Kong-based FWD Group has announced the completion of its 49% stake acquisition in HSBC Holdings’ Malaysian insurance unit, HSBC Amanah Takaful.
Owned by tycoon Richard Li, FWD is now the largest shareholder in the joint venture and intends to rename the business to FWD Takaful Bhd. Besides FWD, other shareholders of HSBC Amanah Takaful include Malaysia’s JAB Capital (31%) and Employees Provident Fund (20%).
Malaysia will be the company’s ninth market across the region and also the first takaful business unit – a type of Islamic insurance under which members contribute money into a 'pool system' in order to guarantee each other against loss or damage – for the group.
FWD is the insurance arm of financial firm Pacific Century Group, which operates across Hong Kong and Macau, Thailand, Indonesia, the Philippines, Singapore, Vietnam, Japan and Malaysia.
Source: Deal Street Asia
JAPAN
Dai-ichi Life Insurance is committing 1 billion yen ($9.03 million) to a venture capital fund investing in renewable energy, marking the insurer’s tenth domestic impact investment in the past 17 months.
Impact investing refers to investments in enterprises that produce social and environmental benefits, in addition to financial returns.
The venture capital fund, EEI Fund 4 Investment Limited Partnership, will invest in startups with new technologies and services in renewable energy and energy storage, Dai-ichi Life says in a statement on March 21.
The fund is managed by Tokyo-based Energy & Environment Investment (EEI). According to Dai-ichi Life, this is the only energy and resource-focused venture capital manager in Japan.
Source: Asia Asset Management
KOREA
The National Pension Service (NPS) is in danger of running out of money in the longer term unless it can improve its profitability.
To that end, it should move its headquarters back to Seoul and implement structural reforms to establish its independence and make fundamental changes to its approach to compensating its employees.
The $560 billion state retirement fund should return from its new location in Jeonju to reinstate its financial network and ensure its professionals are not isolated. It should also pay its fund managers more, as they only earn 70% of the amount of their private-sector counterparts.
NPS should also avoid and resist political interference, taking its cue from the strict principles adhered to by Norway’s sovereign wealth fund in this regard. It should not become embroiled in political scandals, such as it did by voting in favour of the merger between Samsung C&T Corporation and Cheil Industries in 2015.
Source: Asia Times
Korea Investment Corporation (KIC), South Korea’s sovereign wealth fund, is seeking bids from investment advisory firms to evaluate the accounting standards for its mandates.
The request for proposals is part of the fund’s plan to create internal guidelines for its investment system by the fourth quarter of 2020.
The winning bidder will be appointed for a period of 18 months and will be primarily responsible for reviewing KIC’s accounting rules for its assets and establishing price evaluation standards, defining new requirements for its accounting system, and assessing the performance of its investments.
Applications are open until April 5, and the selection process will be carried out between April 18 and May 17.
KIC had $122.3 billion of assets under management at the end of 2018.
Source: Asia Asset Management
South Korea's pension service needs to be insulated from government intervention and must engage the serivices of more experts for asset management, local think-tank Korea Economic Research Institute (Keri) said in a statement.
In the case of pension funds, financial experts and asset managers, not government officials, ought to head the asset management committees in these pension services, which will mean less government intervention, a Keri statement said.
But the Seoul government appears to have a say in key decisions at institutions such as the National Pension Service, as five out of 20 members of the NPS asset management committee are incumbent ministers or vice ministers as is the NPS chairman and CEO Kim Sung-ju, it said.
In contrast to overseas state pension funds, the NPS is also under the Ministry of Health and Welfare and the welfare minister heads the NPS asset management committee. .
The NPS is the world's third-biggest pension fund, with about W639 trillion ($565.2 billion) in assets under management.
Source: Yonhap News Agency
The National Pension Service on March 22 voted in favour of all of local chaebol Hyundai’s controversial proposals in two crucial shareholder meetings, showing it is still supporting the business status quo that the country’s presidents have long said they plan to reform.
In doing so, the $560 billion state retirement fund rejected proposals by activist hedge fund Elliott Management. These proposals included a demand for a $6 billion payout – Hyundai Motor Corp and affiliate Hyundai Mobis pay alarmingly low dividends – and for new directors who would act as a check on managerial excesses.
Rather than backing a mix of Hyundai’s and Elliott’s proposals, it offered total loyalty to Hyundai. It thereby paved the way for the group’s third generation of leaders to take up chairmanships, despite spotty records in business and a notorious lack of transparency.
Source: Asia Times
MALAYSIA
The Employees Provident Fund (EPF) and Kwap will meet the central bank, Bank Negara Malaysia (BNM), to initiate discussions to permit the funds to increase their overseas investments.
EPF CEO Tunku Alizakri Alias and Kwap CEO Syed Hamadah Othman said at an investment forum that the mandates for overseas investments for both pension funds are subject to BNM regulations.
Source: The Edge Markets
The Employees Provident Fund (EPF) has said it anticipates further reductions in contributions as more workers enter the informal economy, which refers to sectors that are not regulated, taxed or protected by the state.
EPF’s new chief executive Tunku Alizakri Alias, said the total number of workers who contributed to EPF had dropped drastically to just 40% from 48% a few years ago.
And with a large number of the country’s 15 million workforce expected to reach retirement age soon, the fund could face more cash problems if contributors make huge withdrawals.
“There might be a day that EPF may not even exist anymore,” Tunku Alizakri told Invest Malaysia 2019, a conference on capital markets last week.
Source: Malay Mail
MIDDLE EAST
Sovereign wealth fund Abu Dhabi Investment Authority (Adia) and an unnamed US state pension fund are investing a total of $650 million to become shareholders in AGL Credit Management (AGL), a new private credit investment firm founded by veteran US loan banker Peter Gleysteen.
Adia is putting in $500 million and the US institution $150 million, US-based AGL said in a statement last week. It did not provide their shareholding percentages. This comes shortly after Adia said it would be investing $500 million in its first fund dedicated to Indian special situations earlier this month.
Source: Asia Asset Management; AsianInvestor
SINGAPORE
GIC has significant exposure to emerging markets, which have been positive for long-term real returns, or net returns above global inflation, according to its chief executive Lim Chow Kiat.
Long term real returns are defined as net returns above global inflation levels.
At an event in Brazil, he said emerging markets accounted for more than 20% of GIC's $100 billion-plus portfolio – higher than most global investors.
GIC manages a diverse portfolio of foreign assets in excess of $100 billion on behalf of the Singapore government.
“I’m definitely more hopeful and positive,” Lim said in an interview in Sao Paulo. “The momentum looks good.”
Source: Bloomberg; The Straits Times
THAILAND
Siam Commercial Bank has entered into exclusive talks with Hong Kong-based insurer FWD Group for the sale of its life insurance business, nearly two years after previous talks broke off.
The memorandum of understanding for potential partnership in life insurance also involves a long-term product distribution pact, SCB CEO Arthid Nanthawithaya said in a statement on Friday.
The companies are in exclusive negotiations to finalize terms and agreements, SCB said, adding that the agreements were not binding and subject to approval. No financial details were given.
Source: Reuters
INTERNATIONAL
Some of the largest public investment funds – such as Singapore’s GIC and the Canada Pension Plan Investment Board – have cut allocations to the UK because of the uncertainty over Brexit, finds a report from IE Business School in Madrid.
State-backed funds invested a total of $21 billion in the UK in 2017 compared with only $1.8 billion last year, said the research, based on the allocations of 91 institutions with $8.1 trillion of under management.
The numbers are skewed because of China Investment Corporation’s $14 billion acquisition in 2017 of London-headquartered Logicor, a warehouse business, from Blackstone. But the drop is sizeable, even excluding that deal.
Source: Financial Times