Insto roundup: US govt advises colleges divest from China; GPF to boost overseas assets
AUSTRALIA
Australian Catholic Super and NGS announced they will merge into a consolidated A$21 billion ($15 billion) industry fund, representing the community and non-government education sectors.
The tie-up between the two not-for-profit industry funds will bring together 85,000 members and A$9 billion from Australian Catholic Super with 120,000 members and A$12 billion in funds from NGS Super, subject to the usual due diligence and member benefit assessment provisions.
The merger announcement is the latest in a long line of amalgamations for sub-scale funds, a trend which has been encouraged by the Australian Prudential Regulator Authority, the Morrison Government, the Hayne Royal Commission and the Productivity Commission.
The announcement comes amid a flurry of tie-ups in the A$717 billion, union-linked industry superannuation sector, encouraged by the Australian Prudential Regulation Authority and Morrison government, both of which have put sub-scale funds on notice.
Source: Australian Financial Review
Cbus will invest up to A$10 million in a New South Wales government pilot that puts industry super funds into social housing development for the first time and expands the funding available to community housing providers beyond the federal government's National Housing Finance and Investment Corporation.
Funding for the pilot project to develop 96 new dwellings across six sites is a drop in the ocean for the A$54 billion super fund giant, but Cbus is already eyeing a second tranche of about 300 dwellings and said its lending to the sector could top A$100 million within three years.
The new scheme, an agreement between Cbus and the New South Wales and Commonwealth governments, can be extended to other states and offers hope of cracking an unresolved problem – how to tap Australia's deep-pocketed pension funds to tackle the shortfall of social homes that stood at 437,600 last year and is forecast to rise an extra 291,100 by 2036.
Source: Australian Financial Review
HONG KONG
Mandatory Provident Fund assets topped the HK$1 trillion ($128.2 billion) mark for the very first time in July to reach the highest level in its 20-year history.
Total assets of the MPF as of end-July was HK$1.008 trillion, up from HK$969.45 billion at the end of 2019. It was driven by greater inflows into default fund choices and a rebound in investments from losses triggered by the coronavirus pandemic.
Source: Asia Asset Management
INDIA
ICIC Lombard General Insurance entered into a definitive agreement to acquire Bharti Axa General Insurance in all stock transaction.
Bharti Enterprises currently owns 51% stake in Bharti Axa General Insurance, while French insurer Axa has 49%.
The board of ICIC Lombard General Insurance “at its meeting held on August 21 considered and approved a ‘scheme of arrangement’ amongst Bharti Axa General Insurance (demerged company) and former company and their respective shareholders and creditors”, the ICIC bank promoted non-life insurer said in a late night filing on August 21.
Source: The Times of India
KOREA
The National Pension Service (NPS) has committed between $100 million and $200 million to an energy and infrastructure fund set up by UK-based private equity firm Actis LLP to invest in Africa, India, and Latin America, according to investment banking industry sources on August 24.
Actis Energy 5, its fifth green energy infrastructure fund, raised $2.9 billion in its first round of fundraising, with commitments from around 20 institutional investors, including the Employees Retirement System of Texas and Denmark’s Industriens Pension. The fund is aiming to raise $4 billion in total.
The energy fund will invest in renewable energy projects that include wind and solar power in emerging markets across Latin America, Africa, India, and others. The respective countries are expected to provide guarantees for the investments given the risk in these markets, despite huge growth potential.
Source: Korean Investors
Twenty-four life insurers, including nine foreign firms, saw their combined net profit decrease by W54.9 billion ($46 million) to W2.07 trillion for the January-June period, according to data from the Financial Supervisory Service (FSS).
The decline came as guarantee reserve spiked to W1.7 trillion in the first half from W672.2 billion from the same period last year. The FSS said the combined net loss of their insurance operations rose 7% year-on-year to W12.6 trillion in the first half, hit by a decline in stock markets.
Source: Yonhap News Agency
Korean life insurers implementing coinsurance should help to improve their capital strength amid the long-lasting low interest rate environment, said Fitch Ratings. The country's financial regulatory authorities recently revised regulations on the risk-based capital (RBC) regime for insurers in response to the introduction of IFRS17 and Korean Insurance Capital Standards, effective from 2023.
One of the revisions permits the reduction of interest-rate risk in the RBC calculation through coinsurance. Fitch said it expects the adoption of coinsurance to be generally positive to life insurers' credit quality in particular. They have to bear a large burden of interest-rate risk in a situation where domestic long-term bond yields remain at record-low levels.
Source: Fitch Ratings
Park Yoo-kyung, an adviser for Dutch pension fund APG Asset Management, criticised South Korean banks and its state electricity provider for providing funding for coal-fired power plants, saying the nation had fallen behind others in taking "sincere" action to the Paris Climate Agreement targets.
The criticism comes a month after Japan announced it would withold most state funding for coal plants, and as Korea's government launches what it calls a Green New Deal, which includes clean energy at home. While Korean lawmakers have committed to debating coal plant funding, the administration of president Moon Jae-in only said it would "thoroughly review" such legislation.
"This undermines, significantly, the Korean government's latest Green New Deal," said Park.
Source: Financial Times
MALAYSIA
The life insurance industry recorded an overall dip of 12.6% to RM5.2 million ($1.3 million) in new business total premiums in the first half of 2020, compared to the corresponding period in 2019, the Life Insurance Association of Malaysia (LIAM) disclosed on August 18.
The decline is attributed mainly to the drop in new business investment-linked policies which contracted by 24.5% in terms of total premiums to RM1.7 million.
Source: Asia Insurance Review
SINGAPORE
Singapore’s sovereign wealth fund partnered with Australian property group Charter Hall to buy a 49% stake in a portfolio of convenience stores operated by Ampol, Australia’s biggest oil refiner, for A$682 million ($488.9 million).
Ampol, formerly Caltex Australia, said it will retain a 51% stake in the 203 freehold convenience stores that it had spun off into an unlisted property trust this week to facilitate the deal.
Source: Mingtiandi
Mall developer Phoenix Mills raised INR11 billion ($146.9 million) from institutional investors through a qualified institutional offering this week, said two people aware of the development, at a time malls are seeing sharply lower footfalls amid a health crisis and weak consumer sentiment.
Foreign and domestic institutional investors took part in the share sale, including a large cheque from Singapore’s sovereign wealth fund GIC, said the first person cited above, who spoke on condition of anonymity. The person did not disclose the quantum of investment by GIC.
Source: Live Mint
The Chinese authorities approved a wealth management joint venture between US asset manager BlackRock, Singapore state investor Temasek and China Construction Bank, as China gradually opens up its financial sector to international firms.
The announcement, which confirms what people with direct knowledge of the matter told Reuters in December, was announced on the website of the China Banking and Insurance Regulatory Commission on Saturday.
Source: Channel News Asia
TAIWAN
Prudential Financial has entered into a definitive agreement to sell its life insurance venture in Taiwan to Taishin Financial for TWD5.5bn ($187m).
Taishin, which forays into insurance space through this deal, will retain all the employees of Prudential Life Insurance after the closing of the transaction.
Source: Verdict
THAILAND
Thailand’s Government Pension Fund plans to boost its overseas investments, especially in the technology sector, as domestic equities offer limited options for the THB1 trillion ($31.68 billion) asset manager.
“Disruptions in the technology and digital industries will still be the major driving force in the post-pandemic world,” Srikanya Yathip, secretary-general of Government Pension Fund, said in an interview at her office on August 20. “Those sectors should deliver very good returns, which are easier to find in international markets than in Thailand.”
Source: Bangkok Post
INTERNATIONAL
The US State Department asked American colleges and universities to divest their holdings of Chinese companies from their more than $600 billion in endowments, the latest move by the Trump administration to discourage pension funds and other American investment funds from buying stocks and bonds of firms from the mainland.
The agency warned in a letter on August 18 that Chinese companies could face a “wholesale delisting” from American bourses by the end of 2021 under new rules recommended by a group of top US regulators, and it would be “prudent” for university endowments to exit their holdings in Chinese firms.
“The boards of your institution’s endowment funds have a moral obligation, and perhaps even a fiduciary duty, to ensure that your institution has clean investments and clean endowment funds,” Keith Krach, undersecretary for economic growth, energy and the environment, wrote in the letter seen by the South China Morning Post.
Source: South China Morning Post
Omers, the organisation that handles retirement benefits for workers in Ontario, Canada, is set to expand its Asia investment portfolio and particularly India and Indonesia given their secular growth trends.
The investment manager is eyeing investments in installation networks, telecom networks to renewable energy facilities to road networks and is particularly interested in India and Indonesia, given their large populations and fast economic growth.
"Five years down the road India could be probably something between five and ten percent of our portfolio," said Ralph Berg, global head of infrastructure at Omers.
Source: DealStreetAsia
Norway’s Government Pension Fund Global — the largest sovereign wealth fund in the world — said it returns were -3.4% for the first six months of 2020, equivalent to a loss of NOK188 billion (-$21.3 billion).
“There were major fluctuations in the equity market in this period. The year started with optimism, but the outlook of the equity market quickly turned when the Corona virus started to spread globally,” Deputy CEO of Norges Bank Investment Management Trond Grande said in a statement.
Its equity investments fell -6.8% and its real estate returned -1.6% over the first half, although its fixed-income investments rose by 5.1%.
Source: CNBC