Insto news roundup: Kwap in revamp, GIC creates China fund

AUSTRALIA

Australian law firm Slater and Gordon announced it would launch a series of class action lawsuits against bank-owned super funds it says offered non-competitive cash interest rates on cash option funds and applied exorbitant fees, affecting millions of members.

The class actions are a response to the recently completed superannuation-focused fifth round of Australia’s Royal Commission, and the law firm said Colonial First State, owned by Commonwealth Bank, and AMP Super would likely be the first targets.

Source: Slater and Gordon

The Construction and Building Unions Superannuation (Cbus) fund set a net zero emissions target for all of its property holdings by 2030, citing its commitment to being a responsible investor. The superannuation fund now holds around $A5 billion ($3.6 billion) of property in its portfolio, and that figure could reach $7.2 billion by the target year. Property fund managers will be given until 2020 to submit roadmaps for how they will attain the net zero emissions.

Source: Cbus

The first week of the Royal Commission’s insurance-focused sixth round of public hearings concluded with a discussion on how employees can be excluded from group insurance – largely provided through superannuation funds – without being aware of the exclusion. Rest Super, in particular, was called out for advising its group life insurer, AIA, to deny an already-approved payout in one instance, and then telling the claimant Rest Super would review their claim.

Australian insurer TAL was also placed under the spotlight for failure to discipline employees for misconduct and breaches of professional standards, failure to meet Australian financial services license conditions, and voiding a claim due to non-disclosure of an unrelated pre-existing condition.

The Royal Commission will continue its sixth round of public hearings until September 21.

Source: ABC

CHINA

China Investment Corp (CIC) and other large investors have expressed interest in potentially buying HNA Group's shares in Deutsche Bank. HNA, one of Deutsche Bank’s largest shareholders, is planning to unload its entire 7.6% stake in the German bank as part of a move to shrink its global footprint.

Potential buyers that have been in contact with HNA recently include Singapore sovereign wealth fund CIC, as well as Chinese state-owned financial institutions Citic Group, China Merchants Group and China Everbright Group, people familiar with the process said. Some European and U.S. investors have also inquired about HNA’s stake in Deutsche Bank.

Source: Wall Street Journal

INDIA

Canadian pension fund manager Caisse de dépôt et placement du Québec (CDPQ) agreed to acquire a 40% in CLP India for $368 million, according to a media report. The deal ends months of negotiations on what is believed to be the largest fundraising through private investment in the Indian renewables sector.

CLP India is the wholly-owned arm of Hong Kong-listed CLP Holdings (formerly China Light & Power) and is one of the largest foreign investors in the Indian power sector.

The parent will retain 60% of the Indian arm.

Source: Economic Times

JAPAN

The Pension Fund Association for Local Government Officials, also called Chikyoren, said it had hired Alternative Investment Capital for a domestic private equity mandate on September 12.

The investment mandate, which is for an unspecified amount, is the pension fund’s second this year. Alternative Investment Capital is a joint-venture investment company owned by Sumitomo Mitsui Banking Corporation and Daido Life Insurance, which invests mainly into private equity and infrastructure assets. Chikyoren, which had assets of ¥11.3 trillion ($100.9 billion) at the end of March, originally began looking at alternative investments in 2016, when it appointed Resona Bank to operate a real estate mandate.

Source: Asia Asset Management

Over 20% of Japan’s population, some 26.18 million people, are now 70 or older, according to the Ministry of Internal Affairs, marking an increase of 1 million from 2017. The number of people aged 65 or older reached 35.57 million, or 28.1% of the country’s population. They also make up 12.14% of the workforce, the highest level ever.

The rising number of elderly citizens underlines Japan’s status as the most rapidly aging major country, and its need to ensure its workers save more for their retirements. The government has already proposed having people gain improved retirement benefits if they begin to draw them down from 70 years of age, instead of 65.

Source: Nikkei Asian Review

KOREA

The National Pension Service (NPS) saw the corporate value of six out of 10 of the local corporates into which it heavily invests rise after its adoption of Korea’s stewardship code in July, according to a report by the Korea Corporate Governance Service.

The country’s largest pension fund had stakes of more than 5% in 194 domestic companies as of the end of 2017, and nearly 62% of them posted average positive excess returns of 0.82% for three consecutive business days from July 30. The excess returns rose to 1.17% for the 74 businesses in which NPS owns 10% or more, the report added. The report concluded that “the introduction of the stewardship code had a positive impact on the corporate value of NPS-invested companies”.

Source: Yonhap News

MALAYSIA

Malaysia’s second largest pension fund, Kumpulan Wang Persaraan (Kwap), is to undergo a revamp that will include the creation of a deputy chief executive officer position and the appointment of a new chief investment officer (CIO), a media report has said.

The move comes after the news that Kwap’s CIO Nik Amlizan Mohamed will leave to head Malaysia’s Armed Forces Fund board (LTAT).

The restructuring may take “a couple of months” to complete, Kwap CEO Wan Kamaruzaman Wan Ahmad said, according to the media report.

Kwap had RM140.8 billion ($334 billion) of assets under management at the end of 2017.

Source: Asia Asset Management

MIDDLE EAST

Qatar Investment Authority (QIA) is in advanced talks about an investment in Lufax, China’s biggest online lender and an arm of Ping An Insurance, people familiar with the matter said.

The sovereign wealth fund has been negotiating the potential purchase of a minority stake in Shanghai-based Lufax and could spend about $500 million to $1 billion, the sources said. A deal could be announced as soon as the next few weeks, they added.

Source: Deal Street Asia

SINGAPORE

Singaporean sovereign wealth fund, Government Investment Corporation (GIC), is partnering with GLP, a leading provider of logistics facilities and technology-led solutions, to establish a new fund in China.

The $2 billion venture will focus on income-generating logistics facilities in China. GLP China is the asset manager and will contribute seed assets to the fund.

Source: GIC

TAIWAN

Fubon Life has become the controlling shareholder of a Korean insurer after increasing its stake in Hyundai Life Insurance from 48% to 62% in mid-September. The company will be renamed Fubon Hyundai Life Insurance after capital injection. Fubon Life took a 48% stake in the insurer in December 2015 and owned five seats on the company's 11-member board of directors, while Hyundai Motor Group owned a 50.2% stake.

Source: Fubon Financial, Focus Taiwan

GLOBAL

Insurance companies are planning to take more risks with their investments over the next few years, according to a BlackRock survey of at least 350 executives at insurers globally managing a total of $7.8 trillion.

Almost half of respondents (47%) said they planned to increase risk in the next year or two, well up from the 9% who were planning to increase risk this time last year. Around 40% of them plan to increase their exposure to alternatives, while just 7% are planning to invest less in the area.

Source: Financial Times