Weekly investors roundup: Korea's Hanwha Life targets US real estate; Temasek launches Brazil JV; Japanese insurers on M&A spree overseas
TOP NEWS OF THE WEEK
Singapore's Temasek and Votorantim, one of the largest investment holding companies in Latin America with a 100-year history in Brazil, has announced a strategic partnership to explore new investment opportunities in growth capital in various sectors of the Brazilian economy.
By the terms of the agreement, Votorantim and Temasek will be partners in a new investment fund, in which both parties have committed to invest up to $700 million (about R$3.6 billion). In a further evolution, the Temasek investment team in Brazil, led by Matheus Villares, will move on to form a partnership with Votorantim called 23S Capital.
“Our partnership with Votorantim is an evolutionary phase in our investment strategy and engagement in Brazil, representing a new and exciting way to explore investment opportunities in this geographically important market,” Dilhan Pillay, executive director and chief executive officer of Temasek, said.
Korean Hanwha Life Insurance is set to kick off direct investment in overseas real estate via its subsidiary in the US, according to investment banking sources. The Korean insurer earlier this month injected W211.3 billion ($161 million) into its US-based subsidiary DP Real Estate America, a real estate investment firm founded in June 2022.
Wholly owned by Hanwha Life, DP Real Estate America is the Korean insurer’s first real estate investment subsidiary targeting overseas properties. The capital injection is to strengthen Hanwha Life’s alternative investment portfolios, as well as enhance the insurer’s competency in global asset management, a Hanwha official said.
Source: Korea Economic Daily
Insurer Tokio Marine Asia has made a strategic partnership with Arbor Ventures (Arbor), a global fintech- and insurtech-focused venture capital firm (VC), headquartered in Singapore. The partnership is established through Tokio Marine Asia’s Innovation Lab in Singapore.
Tokio Marine will identify and invest directly in high-growth potential startups through the CVC Fund in addition to partnering with Arbor and other leading VCs for insights and access to “promising startups leading the digital transformation in insurance”.
Arbor has offices in Singapore, USA, Japan as well as a presence in Europe, Middle East and North Africa.
Source: Tokio Marine
OTHER INVESTMENT NEWS
The current macroeconomic environment and ensuing interest rate volatility have created opportunities for tactical and dynamic trades, according to Allison Hill, QIC's state chief investment officer.
"Opportunistic asset allocation is always difficult, but we now have interest rates with arguably a more symmetric return profile - an opportunity set which hasn't been present for some time," she added.
That said, Hill remains cautious in positioning the Queensland investor for this future environment with inflation levels that have been compared to the 1970s. Hill is not saying inflation will stay this high for the longer term, but in terms of investing it's a different environment than when inflation was close to zero.
"Few investors around today were actively investing in the 70s, so we are all trying to be attuned to the risks that could arise, particularly if we see stagflation," she said.
Source: Financial Standard
Five Chinese state-owned companies, including China Life Insurance, are seeking to delist from the US amid an unresolved auditing dispute that could see dozens of mainland Chinese firms ejected from American exchanges, as ties between the two nations continue to worsen.
China Life Insurance, PetroChina and China Petroleum and Chemical Corporation (Sinopec) said they would apply for the “voluntary delisting” of their American depositary shares (ADS) from the New York Stock Exchange, according to their filings on August 12 to the Hong Kong stock exchange where their shares are also listed.
A spokesman for the China Securities Regulatory Commission (CSRC), the market watchdog, said that “it was normal for companies to list or delist from any market”.
“These companies have fully complied with the US regulation. However, their delistings are related to the low turnover in the US. And since they are listed in other markets, the delisting will not affect their fundraising ability in other offshore markets,” the CSRC spokesman said.
Source: South China Morning Post
HSBC overstated the risks of spinning off its Asia unit when it rebuffed such a proposal by shareholder Ping An Insurance Group, a source familiar with the Chinese insurer's thinking said, adding the move could unlock up to $35 billion in value.
HSBC, which makes the bulk of its sales and profit in Asia, came under pressure from Ping An, its biggest shareholder, in April to explore options including listing its mainstay Asia business to increase shareholder returns.
The detailed rebuttal as described by the source with knowledge of Ping An's thinking represents the investor's most detailed pushback yet of HSBC's strategy, and signals Ping An's intention to continue the dispute.
Hang Seng Bank, a Hong Kong-based lender majority owned by HSBC Holdings Plc, is seeking an insurance partner after its existing agreement with Australia’s QBE Insurance Group Ltd. expired, according to people familiar with the matter.
Hang Seng Bank is working with a financial adviser as it explores a so-called bancassurance partnership, which could be valued at more than $100 million, the people said, asking not to be identified because the matter is private. Under such an agreement, an insurer typically pays an upfront amount to sell its products in the bank’s branches.
Insurance firms seeking to expand in Hong Kong have expressed preliminary interest in the transaction, the people said. QBE could also propose a new partnership deal, building on its existing relationship, they said. Considerations are ongoing and no final decisions have been made, the people said. A representative for Hang Seng Bank declined to comment.
Marubeni Pension Fund (MPF) a corporate pension fund of Marubeni Group, has implemented Japan’s stewardship code, which is a set of principles for responsible institutional investors in the capacity of institutional investors as asset owners. The code’s principles aim to help institutional investors in fulfilling their stewardship responsibilities.
The move comes as Marubeni has been making efforts to enhance corporate governance as a platform that ensures sound, transparent, and efficient management to increase its corporate value and become a reliable corporate group committed to social and economic development and the preservation of the global environment, according to a statement.
Consequently, MPF will request asset managers to fulfill their stewardship responsibilities and behave as responsible institutional investors contributing to the enhancement of the corporate value of Marubeni’s investee companies.
Dai-ichi Life Holdings has announced a deal to acquire New Zealand industry peer Partners Group Holdings for about NZ$980 million ($623.6 million). Dai-ichi Life aims to make Partners Group a wholly owned subsidiary by April 2023 after gaining regulatory approvals, according to its announcement August 12.
Dai-ichi Life said it is committed to keeping Partners Life a stand-alone New Zealand business, with the executive team staying on. Partners Life was first established in 2010, having since become New Zealand’s second largest insurer in terms of in-force and new business premiums.
Source: Jiji Press
Mitsui Sumitomo Insurance has agreed to buy Warren, New Jersey-based fronting insurer Transverse Insurance Group. Mitsui will pay $400 million for the company, which links reinsurers to managing general agents, according to a note on the deal from law firm Willkie Farr & Gallagher, which represents Mitsui Sumitomo.
Transverse, which was founded in 2018 with backing from private equity firm Virgo Investment Group, is headed by chairman and CEO Erik Matson, who previously worked at various insurers and reinsurers including American International Group, Munich Reinsurance and Allianz SE.
The company is capitalized at $107 million and retains some of the risks it fronts for reinsurers, according to the note.
Source: PR Newswire
Japan’s life insurers and pension funds sold record amounts of foreign bonds in July as heightened volatility in global debt markets damped appetite.
Lifers disposed of a net ¥1.56 trillion ($11.5 billion) of the securities while trust banks’ trust accounts, which are seen as proxies for pension funds, sold ¥865.8 billion of the notes, according to preliminary data from the Ministry of Finance. Both sales amounts were the highest ever for the two groups.
The National Pension Service (NPS) committed W204.4 trillion won ($156.7 billion) to alternative investment as of end-2021, up 32.7% from the previous year, out of a total portfolio of W918 trillion. Of the committed capital, W99.2 trillion has been invested in alternative assets. Cash reserves and other liquid assets increased 48.8% to year-on-year W105.2 trillion as of end-2021
By asset class, private equity commitments topped the list at W84.6 trillion, followed by real estate with W66.5 trillion and infrastructure with W47.1 trillion. The pension fund committed less capital to hedge funds and multi-assets, with W4.4 trillion won and W1.8 trillion, respectively.
Capital invested in the top three asset classes was less than half of its total commitment. The pension fund injected W34.5 trillion into private equity, W32 trillion into real estate and W27.9 trillion toward infrastructure.
Source: Korea Economic Daily https://www.kedglobal.com/pension-funds/newsView/ked202208120022
Meanwhile, NPS faces criticism over potentially weaker-than-expected plans to curb investments in coal. The NPS is reviewing options including a proposal that would limit holdings of companies that generate more than half their revenue from coal mining and power generation. That's a far more lenient threshold than global peers and one that would have only minimal impact on its portfolio.
"The negative consequences of the NPS failing to make climate-conscious investments will be enormous," said Kim Sung-ju, an opposition party lawmaker and a former chairman of NPS. "Given its clout, the fund's reluctance to actively respond to climate change can severely undermine the world's net-zero efforts."
The fund is continuing to work on plans for its coal-based investments after pledging to divest from the dirtiest fossil fuel more than a year ago. A local unit of Deloitte in April completed a study that recommended the NPS should consider policies that would prohibit investments in companies that win either more than 30%, or more than 50% of their revenue from coal, according to a report seen by Bloomberg News.
Parafin, a fintech infrastructure startup that companies such as marketplaces, vertical SaaS, and payment processors rely on to launch and embed financial services for their sellers, announced that it has raised a $60 million Series B financing round led by GIC, bringing its total equity funding to $94 million.
This round includes participation from new and existing investors, including Series A and Seed lead investors Thrive Capital and Ribbit Capital.
With its new capital, Parafin intends to continue to launch new, innovative products for small businesses, such as business charge cards, and further establish its market leadership in embedded financial services.
Canadian pension fund manager, Caisse de dépôt et placement du Québec (CDPQ) will lead the Series D funding round for CleverTap — a B2B SaaS platform for customer engagement and retention founded in Mumbai in 2013 — to raise $105 million.
CDPQ, has committed $75 million, with participation from IIFL AMC’s Tech Fund, along with existing investors Tiger Global and Sequoia India, according to an official announcement on August 10.The funds will be used to support CleverTap’s global expansion and enhance the development of its technology.
As part of the transaction, CDPQ will join CleverTap’s Board of Directors upon closure of this funding round. IIFL AMC’s investment is subject to approval from Securities and Exchange Board of India.