Weekly investors roundup: China's CIC sets carbon neutrality goals; Korea's GEPS finds new CIO
TOP NEWS OF THE WEEK:
The China Investment Corporation (CIC) on May 23 released guidelines on reaching carbon neutrality at the portfolio level in the next five years and beyond, covering asset allocation and investment, risk management, research, operations, and internal cooperation.
On asset allocation, the sovereign wealth fund pledges to incorporate climate change factors into asset allocation from a strategic perspective, formulate differentiated sustainable investment assessment guidelines based on asset class, and impose higher standards on existing and new deals with carbon footprints to improve asset quality and performance.
It will also look into and invest in new opportunities related to climate change.
South Korea's Government Employees Pension Service (GEPS) has reportedly named Baek Joo-hyun, former alternative investment head at Samsung Life Insurance, as its new chief investment officer.
The pension fund appointed Baek on Friday (May 27) after it conducted the final interview with seven shortlisted candidates on May 20. He will take office in June for a two-year term, which can be extended by one year depending on his performance, after current CIO Seo Won-joo’s term ends by the end of May.
In Samsung Life, Baek has held the reigns in areas like alternative investments, corporate strategic planning, global credit research and portfolio management. Seo also worked for Samsung Life for 26 years with various asset management roles in the insurer’s offices in New York, London, Singapore and Seoul.
Source: The Korea Economic Daily
Westpac is transferring its superannuation funds to Mercer Super Trust, including the A$37.8 billion Westpac Group Super Plan.
The BT Super Board and Mercer announced on Thursday (May 26) that they had signed a heads of agreement to merge BT’s Personal and Corporate superannuation funds into the Mercer Super Trust to create a A$65 billion superannuation fund that covers 850,000 members.
Westpac has also agreed to sell Advance Asset Management, which has A$44 billion of funds under management, to Mercer.
Source: Westpac, Financial Standard
China will allow foreign institutional investors to trade bonds on its smaller exchange market in its latest step to attract more capital inflows by opening its financial markets, after a record selloff of Chinese holdings by foreign investors.
Qualified foreign institutional investors, which can include central banks, sovereign funds, commercial banks and pension funds, will be allowed to invest in bonds on the exchange market, the People’s Bank of China (PBOC) said in a statement published on its website. The move would “help expand capital inflows to China,” it added.
MORE INVESTMENT NEWS:
Australian insurers’ investment income fell “significantly” into negative territory in the year ended March 31, according to the Australian Prudential Regulation Authority (Apra) on Thursday (May 26).
Investment income fell to -A$942 million (-$645 million), compared with A$1.6 billion a year earlier. Apra also noted unrealised losses on interest bearing investments because of the sharp rise in bond yields during the first quarter of this year.
However, the industry attained a net profit after tax of A$1.2 billion and a 4.3% return on net assets thanks to its underwriting business, which garnered A$4.7 billion last year, a 200% increase from the previous year.
Source: Australian Prudential Regulation Authority
AustralianSuper and the Australian Retirement Trust (ART) will likely dominate the super industry by 2040 and will likely each have over A$1 trillion of assets under management, according to KPMG’s Super Insights report.
Aware Super may also grow to A$600 billion, while Insignia could reach A$500 billion by 2040.
A small number of mega funds will continue to pull away from the rest of the super fund market population, the KPMG report said.
Source: Financial Standard
AIA Group on Monday (May 30) announces that AIA China has received approval from the China Banking and Insurance Regulatory Commission (CBIRC) to begin preparations to establish a new branch in Henan province.
The Chinese life insurance market remains significantly underpenetrated and offers tremendous growth potential for AIA as the group expands into new geographies and deepens its presence through its established operations, AIA said in an announcement.
Branch operations in Henan will commence on completion of AIA’s preparations and on securing final regulatory approvals.
China’s voluntary employee pension funds reported a 2.8% loss in the first quarter as bets on the stock market blew up amid a slump, highlighting the impact of market volatility and indicating a need for a more market-oriented fund-management approach as Beijing reforms its massive pension system.
The Pillar 2 fund recorded a loss of 72.6 billion yuan (US$10.9 billion) for 29.3 million employees in the first quarter – a decline of 2.8% as measured by weighted average return rate. Equity assets accounted for the bulk of the loss, declining 3.2%, while fixed-income investments gained 0.2%, according to data from the Ministry of Human Resources and Social Security.
Source: South China Morning Post
The Securities and Futures Commission (SFC) and the China Securities Regulatory Commission (CSRC) on Friday (May 27) announced details for the implementation of plans to include eligible exchange-traded funds (ETFs) in Stock Connect.
According to the joint announcement, the principal arrangements for ETF Connect will make reference to those under Stock Connect and follow existing fund operations as well as the laws, regulations and operational models governing trading and clearing in the two markets.
It will take about two months from the date of the joint announcement to prepare for formal implementation. A separate announcement will be made about the official launch date in due course.
Hong Kong’s Insurance Authority is the latest financial regulator to reveal it is facing a personnel shortage, saying it is understaffed by nearly 10% as a result of losing talent to private insurers, according to chairman Stephen Yiu Kin-wah.
The authority currently has about 300 staff members, Yiu said, leaving more than 30 vacancies that it is seeking to fill. The insurance regulator lost 16% of its staff last year, compared with 11% in 2020.
Yiu said many private insurance companies hire staff from the authority to fill vacancies. The industry’s talent shortage is a result of emigration out of the city, according to Yiu, and recruiting new hires has become more difficult because of travel restrictions and quarantine rules.
Source: South China Morning Post
The Financial Services Development Council (FSDC) published a report on May 25 identifying areas where tax can play a “pivotal role to bring the financial service industry to greater heights”.
It recommends changes to tax laws to encourage pension funds to set up offices in Hong Kong for their in-house fund management arms, including better defining qualified institutional investors for tax exemptions.
It also urges the government to address deficiencies in the drafting and interpretation of unified profit tax exemption for funds and the open-ended fund company regime, and review the tax regime for the debt capital market to promote underdeveloped asset classes such as private debt.
Source: Asia Asset Management
The Life Underwriters Association of Hong Kong has launched the Directors' Club for senior insurance executives to better reflect the industry's views to the government.
President Stanley Tse Lap-yee says the club will bring together senior executives while guiding new practitioners in a professional direction.
Prospective members should be company directors or in higher positions and should join the association first, according to Davey Lee Kwun Kwan, president of the club.
Source: The Standard
The Indian state Andhra Pradesh has signed renewables investment pacts worth a total of around $16 billion with three companies including Adani and an affiliate of Singapore's sovereign wealth fund GIC, two state government officials said.
The investment commitments were struck with Adani Green Energy, GIC-backed Greenko and Aurobindo Realty & Infrastructure during the World Economic Forum at Davos, according to a Reuters report on May 25 quoting the officials.
State-owned Japan Investment Corporation is planning a bid for the Tokyo-listed conglomerate Toshiba Corporation, joining a long list of private equity investors who have signaled their interest in buying out the company.
Foreign private equity firms such as Bain Capital, Blackstone Group, and KKR, have also stated an interest in buying Toshiba. So far, a total of 10 potential investors have signed confidentiality pledges as they plan their own bids for the company.
Toshiba Corporation has suffered a series of corporate governance failures since 2015 and currently has a market capitalisation of around $19 billion.
The Government Employees Pension Service (GEPS) plans to hire two to three asset managers for a $100 million global secondary private equity fund mandate. This is GEPS’s first tender for 2022.
The mandate will be structured as a commingled blind fund with a sector-focused strategy and a five-year investment period. It will be excluded from investing in the real estate, infrastructure, and energy sectors.
The applicants must have at least five years of investment experience, including risk management and compliance. They must also have a minimum $1 billion of assets in their private equity strategy said GEPS in its request for proposal on May 19.
The application period ends on May 31, with due diligence and manager selection scheduled by the end of August.
GEPS provides pension services for civil servants, and manages around $17 billion of total assets for 1.25 million members.
Source: Asia Asset Management
The sovereign wealth fund Korea Investment Corporation (KIC) and private equity firm White Whale Group (WWG) are planning to jointly invest $450 million in the US-based engineered equipment company Duravant LLC, sources said on May 26.
KIC and WWG are in the final stage of injecting $150 million and $300 million, respectively, in Duravant. The deal will be made via a continuation fund that global PE firm Warburg Pincus LLC is creating.
Duravant provides manufacturing, sales and service facilities to the food processing, packaging and material handling sectors in North America, Europe and Asia.
Source: The Korea Economic Daily
The New Zealand Super Fund (NZ Super) is partnering with Copenhagen Infrastructure Partners (CIP) on a feasibility work toward an initially planned 1GW development, more than 11% of New Zealand’s current operational electricity generation capacity.
In a statement, the sovereign wealth fund said it welcomed the government’s Budget 2022 commitment to develop a regulatory regime for offshore renewable energy, which included an allocation of NZ$18 million ($11.8 million) over three years.
NZ Super Fund CEO Matt Whineray said that the government’s budget commitment, announced as part of the first Emissions Reduction Plan released last week is a major boost for the project partners.
Source: NZ Super
Singapore sovereign wealth fund GIC has led an investing round in Indonesian robo-advisor Bibit, raising more than $80 million for the digital investment platform.
Other investors in this round include Prosus and previous investors, according to a company statement. Bibit last raised $65 million led by Sequoia Capital India in May 2021 which also included Tencent, Prosus, and Harvard Management Co.
Singapore’s GIC has taken a 7.5% stake in India’s Aditya Birla Fashion and Retail (ABFRL), amounting to Rs. 2,195 Cr. ($282 million) via preferential equity and warrants, according to a statement dated May 24 on the sovereign wealth fund’s website.
GIC will invest Rs. 770 Cr. now towards subscription of equity and warrants, followed by up to Rs. 1,425 Cr. in one or more tranches within 18 months upon exercise of warrants. Post the entire investment, GIC will own about a 7.5% equity stake in ABFRL. Aditya Birla Group will hold about a 51.9% stake in the company post the completion of this transaction, subject to regulatory approvals.
Taiwan’s Fubon Life Insurance has committed $50 million to the latest fund of Dyal Capital Partners, a division of US-based alternative asset manager Blue Owl Capital, according to the insurance company’s regulatory filing.
The commitment is for Dyal V Offshore Investors, an investment fund launched by Dyal Capital in November 2020. According to the investment manager’s latest filing with the US Securities and Exchange Commission, the fund has so far gathered $2.6 billion in commitments from at least 273 investors.