Insto roundup: AIA, Ping An seek acquisitions; EU mulls SWF
ASIA
HSBC is considering a bid for Asian operations being sold by UK insurance conglomerate Aviva as it seeks ways to diversify its business in the region, people with knowledge of the matter said.
London-based HSBC is in the early stages of weighing an offer for at least part of Aviva’s Asian business, the people said, asking not to be identified because the information is private. A deal would help HSBC bolster its insurance presence in Singapore and other parts of Southeast Asia, the people said.
Aviva's operations in the region could be valued at about $3 billion to $4 billion, with an official process slated to kick off later this year.
Source: Bloomberg
AUSTRALIA
Commonwealth Bank of Australia accepted A$2.38 billion ($1.35 billion), for the sale of its life insurance business to Hong Kong-based insurer AIA, A$150 million less than it planned during the original expected completion date in 2018.
The Australian lender said in a statement on August 23 that prolonged regulatory approval processes have led to an extended period of uncertainty for the life insurance unit, CommInsure Life. To expedite the transaction CBA agreed to revised agreements that include the reduced amount, while AIA gained an option to extend a previously announced distribution joint venture in Australia and New Zealand to 25 years from 20 years.
Source: Reuters
Sunsuper awarded an A$150 million ($101 million) green bond mandate to London-based impact fixed-income manager, Affirmative Investment Management, which aimed to deliver a mainstream financial returns while facilitating responsible investing.
Sunsuper chief investment, Ian Patrick, said, “we believe environmental social and governance (ESG) [risk] integration is consistent with better investment outcomes, and has the ancillary benefit of contributing to a better future for our members.”
Source: Investment Centre
Australia’s Future Fund added ex-TPG Capital principal Sid Khotkar to its private equity team. Khotkar joined the sovereign wealth fund as director, and reports to team head, Alicia Gregory.
Khotkar is expected to help assess co-investment opportunities, and oversee underlying managers. He was previously part of TPG’s Australian buyout team, and had worked on deals including Cushman & Wakefield and Alinta Energy.
Future Fund had A$23.8 billion invested in private equity as of March 31, representing 15.4% pf its asset allocation.
Source: Australian Financial Review
CHINA
Talks between the two parties had gone on in fits and starts for several months since last year, stalling over the asking price of Huaxia, which claims to have Rmb500 billion ($71 billion) in assets, with half a million employees in 24 nationwide branches, according to the sources.
The talks mark the latest attempt by China’s financial authorities to break up Xiao’s financial empire, after the financier was persuaded to return to mainland China from Hong Kong on the eve of the 2017 Lunar New Year to help with investigations into his financial affairs. Ping An declined to comment.
Source: South China Morning Post
HONG KONG
The Hong Kong University of Science and Technology has set up the HKUST Entrepreneurship Fund (E-Fund) to support the development of start-ups.
With initial funding of HK$50 million ($6.37 million), E-fund is expected to invest in HKUST start-up companies for the next five years. It can either syndicate with co-investment partners or act as a lead investor.
Selected companies may receive up to HK$2 million of investment from HKUST in support of activities including research and development, as well as business and market development.
Source: OpenGov
INDIA
Several Indian family offices are forming a consortium to make direct private equity and venture capital investments, driven by a lack of consistent returns and high management fees in PE and VC funds.
As a first step, 20 families who are active in the alternative investment space are engaging with each other to discuss and debate the best manner of collaboration, said Soumya Rajan, founder and chief executive of Waterfield Advisors. The Mumbai-based multi-family office and advisory firm is the brainchild of the new initiative.
Source: LiveMint
JAPAN
Global markets have become so synchronised that money managers risk losing on every front, according to Hiromichi Mizuno, chief investment officer of Government Pension Investment Fund (GPIF).
Japan’s $1.5 trillion GPIF lost money in equities, fixed-income and currency positions in the last three months of 2018, Mizuno pointed out on Tuesday in Sacramento, California.
“Conventional wisdom of portfolio diversification is when we lose money in equity we make a profit in fixed income,” Mizuno told the board of the California Public Employees’ Retirement System, the largest US pension fund. “But we lost in every single asset classes and lost in the currency translation as well. It never happened in the past.”
Source: Bloomberg
Japanese insurance company Sompo Holdings partnered with Tokyo-based venture capital firms NTT Finance and AT Partners to launch a $40 million fund that will become a limited partner in Israeli venture capital firms, Nobuyuki Akimoto, co-founder and managing director at AT Partners, said.
The new fund will not invest in specific startups, but rather partner with approximately 10 Israel venture capital firms, Akimoto said. The fund made its first commitment in Israel last month, investing $2 million in a fund managed by Vertex Ventures Israel, Akimoto said
Source: CTech
Japanese provider Taiyo Life Insurance will acquire 35% of Myanmar's Capital Life Insurance, giving it an early foothold in the market.
The roughly ¥760 million ($7.14 million) investment will convert Capital Life into a joint venture affiliate. Myanmar's government is expected to formally approve foreign investment in the sector as early as October.
The Southeast Asian country's insurance market totaled an equivalent of about ¥18 billion in fiscal 2018, only 0.2% of Myanmar's gross national product. That promises a large margin for growth
Source: Nikkei Asian Review
KOREA
National Pension Service (NPS) expects to shift its domestic to foreign ratio from 7:3 to 5:5 by the end of 2024, according to chairman Kim Sung-joo.
Based on the fund’s internal forecast of increasing its holdings to W1,019 trillion by 2024, the ratio change implies roughly more than doubling its foreign investments — across equities, fixed income and alternative assets including private equity and real estate — to about W 509.5 trillion within five years, from W191.9 trillion in 2018.
AsianInvestor has previously reported on the overseas ambitions of NPS.
Source: Financial Times
The Government Employees Pension Service (GEPS) will introduce environment, social and governance (ESG) factors as additional evaluation criteria for selecting two global investment managers to invest $100 million in private equity secondary funds.
GEPS plans to commit $50 million to each of two selected firms, according to its announcement last week. Single sector-focused funds will be excluded from the selection process. It will be its third allocation to global PE secondary funds since it began the investment in 2014.
For the new mandate, fund houses are required to submit their ratings in the assessment report of the UN Principles for Responsible Investment.
Source: Korean Investors
MALAYSIA
Khazanah Nasional plans to issue perpetual debt notes through a special purpose vehicle called a highway trust if a deal is made for the Malaysian government to acquire 15 highways.
News reports last week stated the government had a MYR43 billion ($10.24 billion) takeover proposal on its table, and a Khazanah spokesperson confirmed the sovereign wealth fund had submitted a proposal to the government on toll highways takeover.
The news report, citing sources, said Khazanah would form a special-purpose vehicle (SPV) called a highway trust, to act on the government’s behalf for the acquisitions of all the concessions.
Khazanah Nasional also infused another MYR300 million ($71.51 million) into Malaysia Airlines to keep the national airlines afloat. The sovereign wealth fund has been selling off non-core assets over the past 18 months to shore up cash on its balance sheet. This amount was part of an earlier approved funding.
In March 2019, Malaysia’s Prime Minister Mahathir Mohamad disclosed to the public that the Malaysian government was considering whether to shutter, sell, or refinance Malaysia Airlines. Khazanah took Malaysia Airlines private in 2014.
Source: Sovereign Wealth Fund Institute
PHILIPPINES
Government-run Philippine Deposit Insurance Corp. (PDIC) will raise P45 million ($858,230) from the sale of 191 properties of closed banks including memorial lots via a public bidding next month.
The disposal of these assets increases the chances of recovery of uninsured depositors and creditors of their trapped funds.
Source: The PhilStar
SINGAPORE
Singapore’s sovereign wealth fund will acquire a 25.1% stake in Lendlease International Towers Sydney Trust (LLITST) from Canada Pension Plan Investment Board (CPPIB) and Australia-based property developer Lendlease.
Financial terms of the deal were not disclosed. LLITST holds assets located in the Barangaroo Office Precinct in the Sydney central business district (CBD) – close to Darling Harbour.
Source: DealStreetAsia
SOUTHEAST ASIA
Southeast Asian venture capital firm East Ventures announced the close of its sixth fund at $75 million, exceeding more than double the firm’s initial US$ 30 million target.
According to the venture capital firm, the fund was oversubscribed from its initial $30 million target due to strong demand from ultra-high net worth individuals (UHNWIs), Asian family offices, fund-of-funds, and several sovereign wealth funds.
Established a decade ago, East Ventures is an early-stage venture fund focused on Southeast Asia and Japan, with an emphasis on Indonesia, an attempt to take advantage of Indonesia’s growing internet adoption.
Source: Sovereign Wealth Fund Institute
THAILAND
Yangon-based Citizen Business Insurance Public (CB Insurance) formalised a joint venture with Thai Life Insurance through an agreement signed on August 16 that will see both companies working together to offer new insurance products in the Myanmar market.
Part of the CB group of companies that includes Co-operative Bank, the agreement between CB Insurance and Thai Life came about after the government announced in late July further liberalisation of the local insurance market by giving approval for six foreign insurers to form partnerships with local insurers.
CB group chair U Khin Maung Aye said the partnership sees CB Life holding a 65% stake in the joint venture, with the remaining stake held by Thai Life.
Source: The Myanmar Times
WORLD
American senators are demanding that the Federal Retirement Thrift Investment Board reverse a decision that will channel billions of dollars into funding Chinese companies that they say support Beijing’s military, espionage and domestic security efforts.
A letter to FRTIB dated August 26 said that an impending investment shift by the $578 billion government pension fund would mean about $50 billion of its members’ assets become exposed to the risks of owning certain Chinese stocks.
The demand shows how the US-China rivalry, which has thus far focused mainly on trade war tensions, is spreading further into the arena of financial markets.
Source: Financial Times
Norway's sovereign wealth fund, the world's biggest with $1 trillion-plus in assets, returned 3%, or Nkr256 billion ($28.5 billion), in the second quarter, despite volatility generated by global trade tensions, said the Bank of Norway.
“Uncertainty about global trade and economic growth dampened returns early on, but markets rallied towards the end of the period, driven partly by the prospect of more expansionary monetary policy in developed markets,” said deputy CEO Trond Grande.
Source: CNBC, AFP
In addition the managers of the Norwegian fund may shift the balance of its investments between Europe, the Americas and Asia. North American equity markets have grown faster than European ones since the last time Norway examined the regional weight of the fund’s reference portfolio, in 2012.
And this year investor confidence in Europe has faltered, as the region’s economy slows and that of its largest country, Germany, shrinks amid trade tensions and uncertainty surrounding Britain’s departure from the European Union.
Source: Reuters
Brussels is considering plans to launch a €100 billion ($111.02 billion) sovereign wealth fund to finance European industrial champions to compete with US companies such as Apple and Google and China’s Alibaba.
EU civil servants have drafted a plan for a “European Future Fund” financed by member states to invest in strategic sectors where Europe lags global rivals, according to an internal document seen by the Financial Times.
No EU member state boasts a significant sovereign wealth fund. Norway, which is not in the EU, has the world’s largest, with $1 trillion-plus in assets under management.
Source: Financial Times