Insto roundup: Cbus in offshore infra bet; UOB reviews Pru deal
ASIA
Asian investors dominated cross-border investment into real estate in 2018, as they did the year before, with a 45% market share of such flows over the 12 months to June 30, 2018, according to a new report from property services firm Cushman & Wakefield.
Hong Kong investors were the most prolific from the region, as volumes from this source increased by 20% year-on-year to represent 49% of all Asian international investment, said ‘Winning in Growth Cities 2018/2019’, published last week.
AUSTRALIA
Australian law firm Slater and Gordon filed the first of its superannuation class action law suits on October 9, targeting Commonwealth Bank and Colonial First State in a claim that could exceed A$100 million ($71.3 million).
The action claims that Colonial First State failed to obtain the most competitive interest rate for its members when it invested the cash component of members' funds with Commonwealth Bank. Slater and Gordon first announced it would pursue class action law suits against bank-owned superannuation funds on on September 11, with AMP Super another likely target.
Source: Slater and Gordon
Melbourne-based Construction and Building Unions Superannuation (Cbus) announced its first direct offshore infrastructure investment on October 11, taking a stake in UK ports group Forth Ports. Cbus acuired its minority stake from majority stakeholder Canadian pension PSP Investments, who also sold minority stakes to First State Super and GLIL, a joint venture between a number of UK local government pension funds.
Cbus also announced on October 15 that it had signed up to the Australian Council of Superannuation Investors' Australian Asset Owner Stewardship Code. The code encourages signatories to exercise ownership rights to protect long-term investment value for their beneficiaries by promoting sustainable value creation in the companies in which they invest. Cbus is the fifth signatory to the code, joining AustralianSuper, Christian Super, Hesta, and VicSuper.
CHINA
Ping An is mulling raising the share of real assets from 2% to 10% in its investment portfolio, according to chief investment officer Timothy Chen.
In its Rmb2.58 trillion ($373 billion) portfolio, about Rmb47.53 billion was invested in real assets by the end of the first half of this year. The overall investment yield of real estate was 7.4%.
Chan also said the Rmb360 billion of investment in non-standard debts accounted for about 14.1% of the portfolio, and so far, no defaults had occured on thse investments.
The duration gap has also been improving since 2013, he said. The gap decreased from 8.6 years in 2013 to 6.6 years at the end of June 2018, meaning a lower asset-liability mismatch risk, he said.
Source: cnstocks.com, Caixin
INDIA
The $8 billion Employees State Insurance Corporation (Esic) has awarded Reliance Nippon Asset Management a mandate for managing funds. The size of the madate was not disclosed.
The Indian asset manager also manages funds for Employees Provident Fund, Coal Mines Provident Fund Organisation and the National Pension System.
Source: Times of India
JAPAN
Hong Kong-based activist investor Argyle Management has requested that Dai-Ichi Life sell its stock portfolio and use the money to buy back up to $13 billion of its own shares. Argyle put forward its proposal in a letter dated October 5, arguing that Dai-Ichi's shares are undervalued in large part because it holds a portfolio of stock investments that can be volatile and are deemed a risk factor. It suggested the insurer sell the stocks and then use the proceeds to buy between ¥1 trillion to ¥1.5 trillion in its own shares ($8.9 billion to $13.4 billion).
Dai-Ichi is already in the midst of a small ¥39 billion stock buyback by March 31, 2019, as part of its goal of returning 40% of profits to shareholders. Argyle runs $9 billion in assets, and is understood to own less than 1% of the Japanese insurer's shares.
Source: Wall Street Journal
Reforming Japan's social security system, including pensions and national health insurance, is the government's biggest challenge and it requires an increase in the country's consumption tax from 8% to 10% in October 2019, said prime minister Shinzo Abe.
The proposed hike would follow the last increase in the consumption tax by the Abe government, from 5% to 8%, in 2014. Raising it again is an unpopular measure, but Abe has reasoned that it is the only means for Tokyo to bring in more revenues as it seeks to pay its debt burden down and manage the country's increasingly aged population, which is causing more demand on its pension services.
Source: SCMP, Agence France-Presse, Kyoda
KOREA
The Military Mutual Aid Association intends to liquidate half of its W1.6 trillion ($1.4 billion) of non-performing assets and instead invest them into global assets and alternatives by 2021, said chief executive Kim Do-heo.
The $9 billion fund has struggled to get returns on some real estate investments it made in the early 2000s, and some went bad after the 2008 global financial crisis. Kim said the fund will liquidate W800 billion of this specially managed business - its definition of non-performing projects - within three years.
Source: Korea Investors
PHILIPPINES
The upper house of the Philippines’s parliament approved a bill repealing the Social Security Act of 1997 and expanding the powers of the Social Security Commission, the governing body of the Social Security System (SSS).
The house also agreed to adopt the Social Security Act of 2018 (SSA 2018); the final version would have to be ratified by both chambers of Congress before it sent to the President for final approval.
The SSA 2018 seeks to ensure the long-term viability of the SSS by bringing in professionals on the SSS board and expanding the social insurance fund’s investing capacity to improve the returns it generates for its members.
Source: Rappler
SINGAPORE
United Overseas Bank is reviewing its insurance business, including an existing partnership with Prudential, after Southeast Asia witnessed a wave of lucrative distribution deals, people familiar with the matter said.
UOB has been soliciting ideas from potential advisers regarding its life insurance tie-up with Prudential, including ways to get more value out of the operations, said the people, who asked not to be identified because the information is private. Possibilities include renewing its agreement with the London-based insurer, which started in 2010, or looking for another partner, the people said.
Source: Bloomberg, The Straits Times
GIC is believed to be the successful bidder for Exchange Tower, at 2 The Esplanade, paying more than A320 million ($229 million) in what is considered to be the highest-profile commercial property transaction in Perth this year.
The purchase comes after weeks of speculation about whether joint owners AMP Capital and Primewest would sell all or part of their premium-grade 40-level tower.
The Exchange Tower purchase would be GIC’s second significant Perth office acquisition after it snapped up the A-grade Quadrant, at 1 William Street, for A$175 million in a deal brokered by Primewest.
Source: West Australian
Newly formed cyber-security firm Ensign InfoSecurity (EIS) has appointed Yeoh Keat Chuan, the managing director of Temasek International's enterprise development group, as its interim chief executive as the search for a longer-term leader continues.
Ensign, which was formed in September as a joint venture between Temasek Holdings and listed telco StarHub, said that Yeoh will drive EIS's strategy in the firm's early period, and focus on improving and integrating the capabilities within EIS to meet growing demand for high-end cyber-security services.
Source: The Straits Times
INTERNATIONAL (EX-ASIA)
Canada’s second biggest pension fund manager is to acquire General Atlantic and HIG Capital’s investment in FNZ, a New Zealand-based financial technology firm, in one of the biggest fintech deals this year.
The acquisition by La Caisse de dépôt et placement du Québec (CDPQ) represents the first investment by CDPQ-Generation, the sustainable equity partnership announced last week by CDPQ and Generation Investment Management, a London-based sustainable investments firm. The transaction values FNZ at £1.65 billion ($2.17 billion).