Asset owner news roundup, Sep 4
ASIA
Seven Asian pension funds now feature in Willis Towers Watson's latest list of the 20 biggest globally, after India’s Employees’ Provident Fund moved up two spots from the previous year to 19th.
Thee seven funds' combined assets under management (AUM) accounted for $3.3 trillion, surging by 25.6% during 2017 and representing 44.3% of assets in the top 20. In the 300-strong list, the AUM of all Asia-Pacific pension funds (49) increased by 20% to almost $5 trillion in 2017, outpacing the overall increase of all 300 funds listed of 15.1% to $18.1 trillion.
The other Asian institutions in the top 20 remain Japan’s Government Pension (1st), Korea’s National Pension Service (3rd), China’s National Social Security Fund (6th), Singapore’s Central Provident Fund (9th), Japan’s Local Government Officials (12th) and Malaysia’s Employees Provident Fund (14th).
Source: Willis Towers Watson
Commerzbank’s London headquarters is set to be sold in a deal worth £425 million ($547 million) to an undisclosed Asian buyer later this week, City AM reported on September 3.
An agreement for 30 Gresham Street, which was put on the market by Korea’s Samsung Life Insurance earlier in the summer, is reportedly nearing its final stages. This comes only a week after Korea’s National Pension Service bought Goldman Sachs’ new European HQ for £1.2 billion.
Source: City AM
AUSTRALIA
Local Government Super awarded an environmental, social and governance (ESG) mandate to Pimco, for A$440 million ($316.58 million) of investments into global credit and government bonds.
Craig Turnbull, chief investment officer of LGS, said the appointment of Pimco to the strategy reflected the asset owner's desire to ensure long-term sustainable returns, while actively managing its ESG risks. It marks the first time LGS has awarded an ESG-specific mandate to global credit and government bonds.
Source: Super Review
CHINA
Fullerton Financial Holdings, a unit of Temasek Holdings, and Bank of China have jointly acquired 27 community banks from China Construction Bank for Rmb1.61 billion ($236.05 million), setting a new record in terms of the number of community banks being transferred in a single transaction.
The public listing and auctioning process of the state-owned assets to be transferred were facilitated via the Beijing Financial Assets Exchange. The transaction is subject to regulatory approval and other customary closing conditions.
Source: Fullerton Financial
Since the outbreak of A-share market volatility in 2015, the largest institutional investor in the market has become China’s “national team”, a group of domestic state-owned firms, reports Yicai.com.
As of the end of June 2018, the team held a total of 1,141 A-shares worth Rmb3.1 trillion ($450 billion) at the time of reporting on September 3. That far exceeds the amount held by insurance institutions and public funds, which is less than Rmb2 trillion.
The national team includes the China Securities Finance Co, five customised funds, Central Huijin Investment and investment platforms under the administration of the State Administration of Foreign Exchange.
HONG KONG
Hong Kong-based insurer FWD group has agreed to buy HSBC Holdings’ stake in a Malaysian insurance joint venture as part of a plan to expand its presence in Asia, according to a media report.
FWD is acquiring the British lender’s 49% stake in HSBC Amanah Takaful (Malaysia) initially, with plans to ultimately own a majority by buying some shares from the existing partners, the report said.
Source: Reuters
INDIA
Life Insurance Corporation of India is holding a board meeting on September 4 to consider the acquisition of a 51% stake in debt-ridden IDBI Bank, according to a media report.
India's largest state-run insurer is in the process of picking up an additional 7% stake in the bank through preference shares. It already owns a 7.98% stake.
India's capital market regulator mandates an open offer to buy out the remaining shareholders when an entity acquires 25% or more of a listed firm.
For the deal to go through, the Insurance Regulatory and Development Authority of India separately waived a requirement that restricts insurers from owning more than 15 per cent of a single company.
KOREA
Korea Post intends to select asset managers to help it invest more into mezzanine and distressed debt, add to overseas infrastructure and real estate assets, and increase its allocation to hedge funds, president Kang Seong-ju said.
The institutional investor, which has $112 billion in assets, has already put $760 million into mezzanine and distressed debt, and invested $600 million into US collateralised loan obligations, although it avoids the higher risk equity tranches, noted Kang. He noted that he recently met Australia’s Macquarie Group to discuss raising its infrastructure investments.
The fund next wants to increase its hedge fund allocations by W300 billion ($270.28 million) by the end of 2019, while reducing its allocation to equities.
Source: Business Times, Bloomberg
President Moon Jae-in said the government would "guarantee" state pensions for as long as it existed, in an attempt to forestall concerns over predictions the National Pension Service (NPS), Korea's largest pension fund, would run out of money by the 2050s.
Earlier in August, NPS had estimated it could run out of funds by 2057, amid an aging population and a birth rate of just 1.05 births per woman in 2017. This caused public jitters about citizens' ability to draw pensions in decades to come. Moon ordered public officials to stipulate the government's repsonsiblity to ensure pension payments in a legal context "to alleviate people's anxiety".
Korea's government intends to submit pension reform plans to the National Assembly by October; one suggested reform would be to raise contributions to the NPS from 9% of a person's average annual salary to 10.8%.
Source: Korea Joongang Daily
ING Korea changed its name to Orange Life, with private equity owner MBK Partners beginning discussions with Shinhan Financial Group over a potential acquisition. MBK had originally bought a 59.15% stake in the insurer for W1.8 trillion ($1.62 billion) in 2013.
Orange Life is the sixth-largest insurer in Korea. If Shinhan gains Orange Life it could merge it with its existing insurance division, making the resulting company nation's fifth largest insurer.
Source: The Korea Times
The South Korean government rolled out the first tranche of a $9 billion investment fund being overseen by the Financial Services Commission and the Ministry for SMEs and Startups.
The fund is designed to encourage and invest into made technological growth areas, including artificial intelligence, drone technology and fintech. It will dole out $2.8 billion in startup funds this year, and then $3.3 billion for the next two years.
Source: The Financial Times
MALAYSIA
Civil service pension fund Kumpulan Wang Persaraan (Kwap) has acquired two student accommodation developments in the UK, namely 800 Bristol Road in Birmingham and The Mill House in Edinburgh.
Both properties were acquired from IP Investment Management (HK) and Maven Capital Partners, for a purchase price of £14.62 million and £25.13 million respectively, for a total of £39.75 million ($68 million).
Kwap says its acquisition of properties is driven by the fund’s strategic asset allocation, which is now 40% in fixed income, 45% in equities, and 15% in alternative investments, of which property investments comprise 9% of the allocation, followed by private equity at 4% and infrastructure at 2%.
Source: Kwap
INTERNATIONAL
Canada Pension Plan Investment Board (CPPIB) said it would invest in the WestConnex toll road project in Sydney, Australia as part of the Sydney Transport Partners consortium.
The consortium was named the successful bidder for a 51% ownership stake in WestConnex, representing A$9.26 billion of total proceeds to the State of New South Wales for that stake. CPPIB will hold a 20.5% interest in the consortium’s ownership stake.
WestConnex is the largest road infrastructure project currently under way in Australia. The 33-kilometre development is being built in three stages and will help connect western and southwestern Sydney with the city, port and airport.
Source: CPPIB
Other asset owner news reported by AsianInvestor:
China's PICC eyes govt bonds, A-shares for investment
OTPP, CPPIB cut listed stocks, underline Asia focus
Taiwan lifers' foreign assets set to plateau under new rules
Prudential Malaysia CIO flags US recession concerns
Future Fund targets private markets to boost returns