Asset owner news roundup, Aug 14
AUSTRALIA
State-owned investor Queensland Investment Corporation (QIC) is reportedly preparing to use China’s Bond Connect by the end of the year. The $74 billion fund issued a report on China’s bond market in July, calling Bond Connect a game changer because it cut out many of the onshore requirements present in previous onshore investment schemes. The report mentioned other benefits of investing in the Chinese bond market, including greater yields and diversification, and it appears QIC is ready to put its money where its mouth is.
Source: Bloomberg
Melbourne-based superannuation fund UniSuper will introduce a number changes to its fees, starting from October 1. Members in the Accumulation 1, Accumulation 2, and Personal Account-type accounts will have their fixed administration fees replaced with a range of reduced fees depending on the size of their account balance, up to $4,500. The superannuation fund reports the change in fees will mean over 100,000 members will end up paying less. It will also reduce investment fees for its cash and Australian bond investment options by 0.03% per year.
Source: Unisuper
Regulator Australian Securities and Investments Commission (Asic) released an update on August 7 regarding the size of refunds paid or offered to customers by financial advice institutions. The nine institutions, including superannuation fund trustees like StatePlus and Nulis, have paid or offered a total of A$259.6 million ($192.5 million) as of June 30 after admitting to charging fees without providing advice. The regulator estimated total future compensation would eventually reach $270.2 million.
The refund programme takes place against the backdrop of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. Round five of the commission started on August 6 and is focused squarely on governance issues in the Australian superannuation industry, including the practice of charging either incorrect fees, or fees for no service. The public hearings will last until August 17.
Source: Asic
CHINA
Ping An Insurance was reportedly interested in acquiring the Asia assets of London-headquartered Prudential. Such an acquisition, were it to take place, would offer Ping An an immediate presence across several Asian markets, but is unlikely to come cheap. Prudential is in the middle of separating its business into two, spinning out its UK business and fund house M&G.
The rumoured deal may prove to be little more than market speculation; a spokesman for Prudential told AsianInvestor that there had been no formal approach by Ping An and no discussions. A Ping An spokesman declined to comment. There is also speculation other organisations are interested in a sale of the assets.
Source: Bloomberg
JAPAN
Dai-Ichi Life Insurance bought the life insurance division of Australian finance group Suncorp for A$725 million ($540 million) through local subsidiary TAL Dai-Ichi. The deal, announced on August 9, will include a 20-year strategic alliance agreement in which Dai-Ichi's subsidiary offers life insurance products through Suncorp’s Australian distribution channels. The transaction is expected to be completed by the end of 2018.
The purchase marks an increasing desire by Japan's life insurers to diversify away from their home market's aging demographic. Several companies from the country have bought into Australia's life insurance sector, and in 2011 Dai-Ichi itself bought TAL, which was then the country's number two life insurer. Foreign players control around one-third of Australia's fragmented life insurance market.
Source: Suncorp, Nikkei Asian Review, Reuters
The Ministry of Health, Labor and Welfare in considering steps to let more part-time workers join corporate pension and health insurance programmes. Now, only part-time employees working at companies with over 501 workers can enroll in such programmes, but the ministry is thinking of lowering the employee total to allow more to sign up by the 2020 fiscal year. It is setting up a working committee to review the idea, and hopes the reform would encourage more women to enter the workforce.
Source: Japan Times
Government Pension Investment Fund (GPIF) appointed two institutions to act as custodians for its short-term assets. Trust and Custody Services Bank and The Master Trust Bank of Japan were announced as the two custodians by the pension fund on August 8. GPIF had ¥158.58 trillion ($1.44 trillion) in assets as of the end of June, and it had ¥10.71 trillion or 6.65% of its total investments in short-term assets.
Source: GPIF
KOREA
National Pension Service (NPS) was reportedly chosen as the preferred buyer of the European headquarters of Goldman Sachs, based on Farringdon Street in London. The pension fund is believed to be favoured to buy the building in a deal that could be worth £1 billion to £1.5 billion ($1.3 billion to $2 billion).
The fund, which has assets under management of around $570 billion, is believed to have offered the best price from among a shortlist of three bidders. It marks the latest sign of Korean institutional investors seeking to buy premium London property at a time when sterling is relatively weak.
Source: Korea Investors
The government is considering an extension to the pension subscription period by five years, allowing people to keep saving towards their pension until they are 65 years old. Currently the country's legal retirement age is at 60, but people born in 1969 or later only begin to receive a pension at 65.
The result of this is that many individuals face a five year period without income between their retirement and when they can draw a pension. The suggested extension would allow them to keep paying money into their pensions until retirement. Korea has one of the fastest aging populations in the world, behind neighbouring Japan.
Benjamin Diokno, the budget secretary, has said the government will submit a pension scheme reform proposal to Congress this month. This will involve the creation of a new separate pension fund to be managed by the country's Government Service Insurance System, into which new recruits contribute, while current pensioners draw their benefits from the current scheme.
SINGAPORE
A group led by Singapore state fund Temasek is investing $200 million in US clean energy firm Cypress Creek Renewables via preferred stock and warrants.
The state fund has been steadily increasing its North American exposure in recent years, which accounted for 13% of the Singaporean state fund’s $235 billion assets under management at the end of March 31, 2018. Last year, it underscored the region’s importance to its global strategy by opening an office in Washington, DC.
Source: Cypress Creek Renewables
TAIWAN
A senior insurance executive in Taiwan has proposed that the country’s insurers invest in social housing projects to help ease property prices, according to a report in United Daily News quoted by Asia Insurance Review.
Hsu Shu-po, deputy chairman of Taiwan Life Insurance and deputy director of the General Chamber of Commerce of Republic of China, has made the proposal to the Ministry of the Interior and the Financial Supervisory Commission.
He proposed that at least NT$500 billion ($16.2 billion) be raised initially from the insurance industry to build 80,000 social housing units. He said that the rental housing developments could be securitised, so that insurers can have certain investment benefits.
Source: Asia Insurance Review
INTERNATIONAL (EXCLUDING ASIA)
Canada Pension Plan Investment Board (CPPIB) has agreed to partner with Hong Kong-based real estate developer ESR to invest up to $500 million in a new investment vehicle targeting modern logistics facilities in Korea.
ESR’s Seoul-based subsidiary, Kendall Square Asset Management, will help identify new assets, support the acquisition and provide asset management services to the portfolio.
CPPIB and Dutch pension asset manager APG had established a joint-venture platform with ESR and Kendall Square Logistics Properties in 2015 with capital of $500 million.
CPPIB is Canada’s biggest pension fund, with C$366.6 billion ($278.6 billion) under management as of June 30, 2018.
Source: CPPIB
The Teacher Retirement System of Texas, a $151 billion pension scheme, has committed $200 million to Hong Kong-based Baring Private Equity Asia’s seventh Asia fund, according to a monthly transaction report.
It was reported that Fund VII hit its first close at $4.5 billion last month and also took in capital from the C$366 billion Canada Pension Plan Investment Board, among other institutions.
Source: Deal Street Asia
Counting the cost of a Prudential Asia asset sale
Metlife eyes private assets amid downturn fears
Australia's super industry urged to pursue consolidation