Weekly investors roundup: PE giants, China HNWIs woo one another; GIC, Temasek expand India assets
TOP NEWS OF THE WEEK
From a posh Hong Kong office on a Saturday, a group of 20 ultra-wealthy investors dialed into a call with Carlyle Group's head of private wealth management for Asia.
Mostly Chinese, each had earmarked at least $10 million for alternative investments, and they were there to assess the potential benefits of putting their money into Carlyle’s private equity funds.
The meeting reflects the confluence of two trends that are reshaping the private equity landscape in Asia. On the one hand, wealthy Chinese are exploring bigger investments in private assets as they seek shelter from wild swings in public markets. On the other, firms like Carlyle and KKR are increasingly courting rich individuals amid a slowdown in allocations to the region from some of the world’s largest institutional investors.
GIC and ESR Group announced an 80:20 strategic partnership to establish a $600 million joint venture to acquire income-producing core industrial and logistics assets in India.
The Core JV represents an extension of the existing partnership in India between the two, which was initiated in 2020, with the initial capital pool dedicated to investing in development and value-add logistics and industrial opportunities across India.
The new Core JV provides focused capital dedicated to enabling inorganic growth of the platform and will invest in stabilised operational assets in strategic locations across Tier 1 and Tier 2 cities of the country.
Growth stage debt financing platform, EvolutionX Debt Capital, founded by DBS and Temasek, has committed its maiden investment in API Holdings which owns the “PharmEasy” brand and powers the PharmEasy marketplace in India.
API Holdings is India’s largest digital healthcare platform with over 6 million transacting users, 150,000+ active pharmacies, 1,800+ hospitals and 21m+ tests annually providing an integrated end-to-end business solving the healthcare needs of consumers through technology and fulfilment capabilities.
Launched in late-2021, EvolutionX seeks to provide an alternative source of debt financing to enable growth stage technology companies to scale faster and expand into new markets, by leveraging Temasek’s investment expertise and DBS’ global banking networks.
Source: EvolutionX Debt Capital
Furthermore, Temasek's Singapore platform Sheares Healthcare and Blackstone, the world's largest private equity group, have emerged as top contenders for buying Care Hospitals, said multiple sources aware of the development.
The deal could value Care, one of India's largest hospital chains, at ₹8,000-8,200 crore (about $976 million-$1 billion), they said.
Source: Economic Times
OTHER INVESTMENT NEWS
Cadillac Fairview, the real estate arm of the Ontario Teachers’ Pension Plan, and global real estate investor Hines announced a $963 million (A$1.5 billion) partnership to invest in the Australian build-to-rent (BTR) sector on November 2.
The partnership will develop, own, and operate purpose-built BTR assets across Australia and will be seeded by three BTR development sites —15-33 Bank Street and 35-37 Bank Street, South Melbourne; 10 Ballarat Street, Brunswick, and 36-58 Macauley Road, North Melbourne.
The investment strategy of the partnership will focus on projects located in submarkets close to transportation, employment hubs, diverse retail offerings and entertainment centers. The developments will also incorporate ESG-related factors.
Five central departments released a guideline for the implementation of private pension plans on Friday, in an effort to improve the nation's pension system.
The guideline, jointly released by the Ministry of Human Resources and Social Security, the Ministry of Finance and the State Taxation Administration, said individuals joining the private pension plan should first open an account at state-run social security platforms or those operated by commercial banks and then open a capital account at an authorized commercial bank or financial institute.
Those joining the plan are allowed to pay up to 12,000 yuan ($1,650) per year and the payment can be done by installment, month or year.
Source: China Daily
China’s Banking and Insurance Regulatory Commission said that the country’s property sector is an area of concern, although risks are manageable.
“That’s what we are concerned about,” vice chairman Xiao Yuanqi said in response to Hong Kong Monetary Authority chief executive Eddie Yue’s question about real estate’s impact on banks. The interview was aired at the Global Financial Leaders’ Investment Summit in Hong Kong November 2.
Xiao added that the property sector is “stable" and that Chinese banks’ exposure to real estate is at a “reasonable” 26% of total loans. The default ratio of mortgage loans is lower than 0.1%, he added.
Hong Kong’s Securities and Futures Commission (SFC) has given the greenlight for listing digital or virtual asset futures exchange-traded funds (ETFs), acknowledging that times have changed since 2018 when it restricted trading in all virtual asset funds to professional investors.
The SFC outlined listing criteria for the ETFs and explained the change of mind in a statement on October 31. The decision was hailed by the Hong Kong bourse, which says it will help burnish the city’s credentials as an international financial centre.
Source: Asia Asset Management
Norway has agreed to pay Indonesia $56 million in a climate agreement between the two countries, as Indonesia has succeeded in reducing carbon dioxide emissions by preserving its vast tropical rainforests.
The contribution agreement, signed October 19 by both governments, is a follow-up to both countries’ new climate deal which was struck on September 22.
In the deal, the Nordic country will pay Indonesia, home to the world’s third-largest tropical forests, to keep its forests standing, thereby reducing its emissions.
The Government Pension Investment Fund (GPIF) reported an investment loss of ¥1.722 trillion ($11.64 billion) in July-September. It was the third consecutive quarter of negative returns, the longest period since the global financial crisis.
The loss came as monetary tightening in the United States as well as in Europe hit bond prices, while fears of recession weighed on global stock markets, GPIF said.
The world's largest pension fund lost 0.88% for the three months, trimming its overall assets to ¥192.097 trillion. The loss narrowed from 1.91% in the previous quarter.
Also read: Portfolio value at Japan’s GPIF softens in Q2
Funds of some 1.12 million individuals under corporate-type defined contribution pension programs in Japan were left unmanaged as of the end of September. The amount reached about ¥260 billion ($1.78 billion) as of the fiscal year ending March 2022, according to the report compiled by the National Pension Fund Association (NPFA).
In a corporate-type defined contribution pension program, companies pay the premiums and employees manage the funds. It is necessary for people who change or quit jobs to take procedures to transfer the funds to a similar program offered by the companies where they start working or to the iDeCo defined-contribution private pension program for individuals.
If they fail to take the procedures within six months after changing or leaving jobs, their funds are automatically transferred to NPFA.
Heungkuk Life Insurance failed in $500 million early bond redemption scheduled for November 9. This is the first time since 2009 that a Korean financial institution failed in an early redemption of foreign currency bonds.
Investors’ concerns are increasing rapidly. The company attempted at $300 million conversion issue for early redemption in September but failed to find investors. Redemption of the hybrid securities without conversion issue means a decrease in equity capital and potential problems in terms of insurance payment capabilities.
Although the early redemption is not mandatory, non-fulfillment may lead to investors’ disappointment. Thus, the coupon rate applied to regular payments to investors might rise – from 4.475% to 6.7% a year in the case of Heungkuk Life. Hanwha Life and KDB Life are supposed to redeem $1 billion and $200 million of hybrid securities next year, respectively. If the same is repeated, more foreign investors are likely to shun investment in the already tight Korean bond market.
Following the Heungkuk Life case and the general situation for Korean insurers, Korea’s financial regulator is seeking to temporarily relax regulations in the country’s insurance industry to prevent insurers from selling bonds to stabilize the country’s money market. The financial authority has decided to relax regulations in the insurance industry as life insurers face with increasing capital strain.
Under measures announced by the Financial Services Commission and Financial Supervisory Service on November 3 after a meeting with life insurers, insurance companies’ liquidity index evaluation rating will be upgraded by one notch in their risk assessment and application system (RAAS) evaluation until the end of this year. An insurer with second-grade evaluation rating will be moved up to first grade and one with fifth-grade to fourth grade.
The regulator will also temporarily allow insurers to include assets with a maturity of more than three months like bonds that are immediately cashable as liquidity assets. Currently, assets of under three-month maturity are regarded as liquidity. In response to this, insurance companies should refrain from selling bonds and cooperate with the government to stabilize the money market as institutional investors, the financial authority urged.
Source: Maeil Business News Korea
Income Insurance is moving further in its regionalisation push, with a new partnership in Japan marking its first foray out of Southeast Asia and the company’s fifth overseas market in a year.
Andrew Yeo, chief executive of Income, said that their premise of going overseas is as a “digital attacker” to bring their digital propositions to the region.
“That actually allows us to regionalise in a very asset and resource-light manner, to build distribution partnerships with local incumbents who actually, in our mind, have the best knowledge of the marketplace as well as the customers,” he said.
Source: The Business Times
Taiwan's largest pension fund said on Nov 1 it has selected six foreign asset managers to run a bond fund mandate, worth $3 billion, as it seeks to manage its risk exposure amid global market turmoil.
The Bureau of Labour Funds (BLF) picked T. Rowe Price, Wellington Management, PGIM, Ninety One UK, Loomis, Sayles & Company and Pacific Investment Management, with each awarded $500 million to run a total-return bond strategy, it said in a statement.
Taiwan’s China Life Insurance on November 4 said it would reclassify its financial assets under the International Financial Reporting Standards 9 (IFRS 9) to improve its financial strength, following in the footsteps of its peers to cushion itself against rapidly rising interest rates.
The asset reclassification would boost China Life’s shareholders’ equities by about NT$30 billion (US$932 million) and raise its equity-to-asset ratio by 1.3 percentage points, parent company China Development Financial Holding Corp said in a filing with the Taiwan Stock Exchange on Thursday.
China Life’s equity-to-asset ratio, a gauge of a life insurer’s capital adequacy, stood at 4.03 percent at the end of June, higher than the Financial Supervisory Commission’s (FSC) threshold of 3 percent, company data showed.
Source: Taipei Times