Insto roundup: Two supers to merge; GIC’s infra investing
AUSTRALIA
Two Australian pension funds will be merged by December 2020, potentially creating a more than A$25 billion ($17.44 billion) fund to manage the retirement savings of around 150,000 members.
Equipsuper and Catholic Super will be sharing the same board, investment teams and back office support but they have agreed on April 30 to retain their own brands under a memorandum of understanding.
The A$2.65 trillion ($1.87 trillion) superannuation industry will see more traction in consolidation against the backdrop of heightened scrutiny of under-performing funds and growing pressure to cut fees and increase their returns.
Source: Deal Street Asia, Bloomberg
Queensland Investment Corporation (QIC) has offered Superloop, an online infrastructure company, a non-binding indicative bid on April 26, valuing the company at A$1.95 per share.
The A$85 billion ($59.29 billion) has previously offered the firm on April 2 at A$1.90 per share. Superloop’s shares were valued at A$1.46 and closed at A$1.81 on May 3. It is not clear yet whether the deal will complete, but Superloop will give QIC a three week due diligence period.
The Australian Prudential Regulation Authority called for the need to continue strengthening requirements in areas including superannuation funds’ board appointment processes, management of conflicts of interest and life insurance after a review of its 2013 superannuation prudential framework.
The review found that industry practices in key areas such as governance, risk management and outsourcing have been lifted. The review was conducted in May 2018 as a post-implementation assessment of the framework introduced as part of 2013’s Stronger Super reforms.
Source: Investor Daily
INDONESIA
Great Eastern (GE) has sold 5% of its stake in PT QBE General Insurance Indonesia, which it acquired in 2018. It will continue to hold the remaining 95%, GE said on May 4.
The insurer, which is majority-owned by Singapore lender OCBC Bank, had earlier announced it had agreed to sell the Indonesia-registered company to PT Suryasono Sentosa for $1.4 million in January. In December 2018, GE said it was looking to do so to satisfy Indonesian shareholding requirements.
Khor Hock Seng, group chief executive officer of Great Eastern Holdings, said in an announcement on May 3 that Indonesia is a growth engine for the group and presents exciting opportunities.
Source: Business Times
KOREA
The National Pension Service (NPS) will speed up alternative investment decisions and expand the investment scope to include private debt and multi-asset funds as well as single hedge funds in efforts to improve returns.
The move, announced by the Ministry of Health and Welfare on May 3, comes amid criticism that the $570 billion pension scheme has been limited by the complex and long decision-making structure which resulted in missing profitable investment opportunities. Regulations that had restricted NPS’ alternative investments to a narrow range of asset types have made it difficult to boost alternative investment.
For swifty investment execution, NPS will be allowed to decide within the organisation on a co-investment, or a small-size investment of under $50 million, without seeking approval from its highest decision-making body of the fund management committee. By doing so, NPS is expected to shorten an investment decision to four weeks from the current eight weeks.
Source: Korean Investors
South Korea’s financial regulator will take initial steps in reviving the comprehensive inspection of financial firms, including institutional investors, within the next few weeks after four years, prompting concerns the practice may keep the sector on a tight leash.
The Financial Supervisory Service will launch the inspection of at least five local financial firms, starting with KB Securities in May. The confirmed list as of Tuesday included Hanwha Life Insurance and Meritz Fire & Marine Insurance.
More firms are expected to face scrutiny by the FSS. An annual average of 50 firms were subjected to the inspection from 2009 to 2013, but about 25 firms are projected to be named throughout the year, as the FSS has said it would halve the number.
Source: Korea Herald
Foreign life insurers operating in Korea saw their earnings deteriorate sharply in 2018 due to worsening business conditions caused by an economic slowdown and the upcoming introduction of the new accounting standard International Financial Reporting Standard (IFRS) 17.
This was in stark contrast to Korean life insurers which were enjoying an average 20% growth in net profit. Out of six major foreign life insurers ― Lina, Prudential, ABL, MetLife, Tongyang and AIA ― only Lina Life Korea saw its net profit grow. AIA Korea and Tongyang Life Insurance's net profits fell by around 70%.
The combined net profit of the six firms dropped by 34% to W782.9 billion last year from W1.19 trillion in 2017. The company that saw the largest drop in net profit was AIA Korea, whose profit plunged by 76.2%, from W287.6 billion in 2017 to W68.56 billion last year.
Source: Korea Times
Samsung Fire and Marine Insurance has made a “significant minority” investment in Canopius, the Switzerland-based global specialty insurer and reinsurer said in a statement Friday.
The investment, which is subject to necessary regulatory consents, is expected to close in the third quarter of 2019, Canopius said.
Source: Intelligent Insurer, Business Insurance, Insurance Journal
The Korea Scientists and Engineers Mutual-aid Association (SEMA) has appointed Sungmoo Huh, a former alternative investment and strategy head of Seoul-based Multi Asset Global Investments, as its new chief investment officer for a two-year term.
On May 2, Huh succeeded Du Yeong Jeong who retired at the end of April after serving for extended four years as CIO, SEMA said.
At Multi Asset, formerly known as KDB Asset Management Co. Ltd., Huh headed alternative investment and strategy divisions. SEMA, founded in 2003, manages 5.4 trillion won ($4.6 billion).
Source: Korean Investors
MALAYSIA
Malaysia's civil services pension fund Kwap paid MYR4 billion ($953.33 million) into the bank account of SRC International between 2011 and 2012, the Kuala Lumpur High Court heard on April 30 at the corruption trial of former prime minister Najib Razak.
Najib is charged with abuse of power for accepting a MYR42 million bribe when he took part or was involved in making the decision to provide government guarantees for a MYR4 billion loan from Kwap (Kumpulan Wang Persaraan) to SRC, a former unit of troubled state fund 1Malaysia Development Berhad (1MDB).
AmBank manager Wedani Senen testified that MYR2 billion was wired into SRC's AmIslamic Bank account on Aug 29, 2011. Another MYR2 billion was credited in one lump sum into the same account on March 28, 2012. Kwap had in 2016 defended its decision to lend the MYR4 billion to SRC as the loan was guaranteed by the Malaysian government.
Source: Straits Times
Sovereign wealth fund Khazanah is set to monetise its telecom giant Axiata in a deal with Norway’s Telenor, with a major tie-up in their operations being announced on May 6.
Both companies’ Malaysia bourse-listed stocks were suspended ahead of the deal, which comes just three months after Axiata sold its stake in Singapore’s M1 to Singapore Press Holdings and Keppel Corporation.
Source: Straits Times
MIDDLE EAST
Saudi Arabia’s $300 billion Public Investment Fund is planning a new office in Asia to focus on China, alongside other new branches in the pipeline, its managing director said on April 30.
But he said the US remains its number one international investment target, with offices coming up in New York and San Francisco, as well as in London, Yasir Othman Al-Rumayyan told CNBC during the Milken Institute Global Conference in Los Angeles.
"Now I’m thinking seriously even to accelerate the Asia office because we see a lot of potential over there,” added Al-Rumayyan, who recently visited Beijing for a forum on China’s Belt and Road infrastructure Initiative.
Source: CNBC
MYANMAR
The government in Myanmar will establish a central provident fund (CPF), as the country is spending more on pension expenses, said Union Minister for Planning and Finance Soe Win. The minister revealed the information in his clarification on the ministry's activities in one year, which was featured in state-run newspapers.
The Ministry of Planning and Finance, Ministry of Construction and Construction Housing and Infrastructure Development Bank are working together and home loans have started by borrowing ¥15 billion ($135.27 million) from Japan.
Source: Eleven Myanmar
SINGAPORE
Singapore’s sovereign wealth fund GIC has acquired a 10% of Terminal Investment Limited (TIL) from Global Infrastructure Partners (GIP) and other existing co-investors for an undisclosed sum.
GIP and a group of co-investors in 2013 acquired 35% in the global container port operator for $1.93 billion and are widely reported to have since lifted their interest to 49%. Geneva-based TIL holds berths and terminal capacity in the major ports used by Mediterranean Shipping Company (MSC). It also handles containers for third parties.
Ang Eng Seng, chief investment officer of infrastructure at GIC, said: “We are pleased to invest in TIL, given its strong business alignment with its majority shareholder, MSC, and attractive growth potential from its pipeline of both existing and new terminals."
Source: IPE
Global private equity major KKR and Singapore’s GIC have together invested $363 million to acquire a controlling stake in India Grid Trust (IndiGrid), the latter announced on May 4.
As part of the transaction, KKR and GIC have invested INR10.84 billion ($157 million) and INR9.8 billion ($142 million), respectively, to collectively own 42% of IndiGrid’s outstanding units. KKR has also applied to become a sponsor of IndiGrid and plans to acquire an additional 15% of IndiGrid’s total units from Sterlite Power.
Following the closing of the transaction, KKR and GIC will collectively own approximately 57% of IndiGrid’s outstanding units, IndiGrid said in a statement.
Source: DealStreetAsia
TAIWAN
The Bureau of Labor Funds’ (BLF) six funds recorded a total profit of NT$215.3 billion for the first three months of the year, 5.5% higher than in the same quarter of 2018, thanks to the rallies in domestic stock and bond markets.
Taiwan’s benchmark stock index soared almost 17% in January through March, while the index fell 8.6% in 2018. Despite the positive start to the year BLF remained prudent about the global market outlook for 2019, noting that the International Monetary Fund recently downgraded its forecast for world economic growth.
Source: Asia Asset Management
INTERNATIONAL
Canada’s Investment Management Corporation of Ontario (Imco), which manages assets for public-sector institutions in the province, is considering Singapore as the location for its regional headquarters.
Imco has C$5.8 billion ($4.3 billion) in Asian investments (9% of its roughly C$60 billion in assets under management) and is looking to “exponentially” increase its portfolio in the region in the next few years, the firm told The Business Times last week.
Source: Business Times
Big asset owners are in talks with India’s Reliance Industries to invest in two infrastructure investment trusts set up to own domestic network operator Reliance Jio’s tower and fibre assets.
The institutions in question include Canadian pension funds Canada Pension Plan investment Board; Ontario Municipal Employees’ Retirement System and British Columbia Pension Corporation; Middle Eastern sovereign funds Abu Dhabi Investment Authority and Mubadala; Singapore’s GIC; and German insurer Allianz.
Earlier this month, Reliance transferred its fibre and tower undertakings to separate companies to move liabilities worth INR1.07 trillion ($15.33 billion) out of Jio’s balance sheet.
Sources: Globe and Mail; Economic Times