Insto roundup: CIC loses senior executive; Abu Dhabi to offload gas pipelines to instos
ASIA PACIFIC
Asia Pacific pensions continued to raise their exposure to foreign assets while focusing on investments in alternatives and equities, according to Mercer's Pension Asset Allocation Insights report for 2020 released on June 4.
South Korean retirement funds have the largest allocation to alternatives among those in Hong Kong, India, Indonesia, Malaysia, South Korea, Taiwan and Thailand. As at the end of 2019, it had a 12.1% allocation to alternatives, up from 11.3% a year ago. Taiwan had the second-biggest alternative asset allocation at 9.6%, up from 8.6%.
The alternative asset exposure is concentrated in private equity and real estate, Mercer said. Few Asian pensions have invested in hedge funds, which represent only a small fraction of the exposure to alternative assets, the report added.
Source: Mercer
AUSTRALIA
UniSuper, the superannuation fund for higher education and research professionals, is grappling with a slew of redundancies as travel bans stop international students going back to school.
The travel bans put in place around the world to curb the spread of Covid-19 will mean the lucrative flow of international students to Australian universities won't be reliable for some time. Central Queensland University has cut 180 staff, and La Trobe University has flagged a shortfall of up to A$200 million ($140 million) and voluntary redundancies. Staff cuts were also seen at Deakin University.
"We're working closely with our university partners as they review their workforce planning strategies and offering support through a number of channels," UniSuper said. That support includes the financial advice team at the fund providing specific support related to redundancies, it added.
Source: Financial Standard
CHINA
China Investment Corporation is joining BNP Paribas and private equity manager Eurazeo to launch a €400 million ($453 million) fund to finance investments by European companies in China.
The move comes more than a year after Chinese president Xi Jinping announced the formation of the fund – the France-China Cooperation Fund – during a state visit to France in March 2019.
The initial €400 million capital comes from the three investors. Their individual shares are not disclosed. But BNP Paribas said the partners may inject up to €250 million more into the fund, with a maximum 25% each coming from CIC and the French bank.
Source: Asia Asset Management
Meng Chen, a team leader at Beijing-based China Investment Corporation’s direct investment arm, has left the $941 billion sovereign wealth fund, adding to a string of recent departures from its investment team.
CIC has now lost at least three executives in as many months. Susan Gao, who was in charge of global fundamental equities managing more than $10 billion, resigned in April, joining Wallace Yu, who had led the fund’s multi-asset group, Bloomberg reported earlier.
Source: Bloomberg
INDIA
Life Insurance Corp of India (LIC) may cut its equity investment target to about Rs300 billion ($3.97 billion) for the current year, the lowest in a decade, as new premium growth declined amid coronavirus-related disruptions, two people directly aware of the insurer’s internal discussions said.
LIC, India's largest buyer of stocks, invested around Rs470 billion in equities in the year to March, a 21% decline from the previous fiscal year, according to official data.
The state-owned insurer has been traditionally called upon by the government to use its deep pockets to rescue privatisation plans and even support the stock markets during major sell-offs. A sharp drop in new premium collections because of lockdown-related disruptions has, however, left India’s largest insurer with less investible surplus.
Source: Live Mint
INDONESIA
FWD Life plans to rename and rebrand the PTCL business. FWD will also enter into a 15-year life insurance distribution partnership with PT Bank Commonwealth, Commonwealth Bank of Australia’s Indonesian banking business.
Source: FWD
JAPAN
Japan’s four major Japanese life insurers – Dai-ichi Life, Meiji Yasuda Life, Nippon Life and Sumitomo Life – face potential impairment losses on equity investments and generally lower investment yields, as they continue their gradual shift to overseas assets, says a new report by rating agency Moody’s.
Disruptions from coronavirus outbreak remain a risk for fiscal 2020. Insurers’ investment yields could fall to reflect a lower-for-longer domestic interest rates and lower dividend incomes. Insurers are also vulnerable to impairment losses on domestic and foreign equity investments if there is a significant drop in equity prices.
The insurers’ allocation to foreign assets increased in fiscal 2020, reflecting their hunt for higher yields. Hedging costs have sharply declined recently and credit spreads have widened, which Moody’s believes will lead insurers into more high-quality credit investments in the US, despite US interest rate cuts.
Source: Moody’s
KOREA
The National Pension Service (NPS) has beefed up investments in private debt and venture capital funds by adding Antares Capital Advisers and Insight Partners to its roster of overseas alternative investment managers in the first quarter of 2020.
Including the two US companies, NPS increased the pool of its foreign alternative investment firms by three during the January-to-March period, according to its recent announcement. It also chose Select Equity Group as its fifth single-manager hedge fund house. NPS did not disclose the allocation amount for the three newly-added investment companies.
Source: Korean Investors
Two South Korean institutional investors, Korea Post and Public Officials Benefit Association (Poba), were among those committing capital to a new $19 billion secondaries fund of funds raised by Paris-based private equity firm Ardian.
The investors comprise major pension plans, sovereign wealth funds, insurance firms and high-net-worth individuals from some 40 countries. The fundraise includes $5 billion in co-investment commitments.
Last year, Korea Post’s savings arm and Poba committed $100 million and $50 million, respectively, to Ardian for secondary investment, or buying secondaries interest in private equity funds.
Source: Korean Investors
MIDDLE EAST
Abu Dhabi National Oil Company (Adnoc) is reportedly close to sealing a deal with a consortium of investors to sell a stake of up to 49% in its natural gas pipelines business.
Adnoc could close the estimated $15 billion deal with the consortium led by New York-based Global Infrastructure Partners and Canada’s Brookfield Asset Management as early as June. The consortium also includes Italian infrastructure operator Snam, Ontario Teachers’ Pension Plan, Singapore sovereign fund GIC and South Korea’s NH Investment & Securities.
It was earlier reported that US investment firm BlackRock had pulled out of the race to become an investor in the Adnoc gas pipelines investment structure.
Source: Bloomberg; Offshore Technology
SINGAPORE
Singapore state investors GIC and Temasek provide loans to companies in the context of investment, and the government does not direct these decisions, said Indranee Rajah, the minister in the prime minister's office, in parliament on June 5.
Like all other investments that the sovereign wealth fund and the investment company make, these are commercial decisions taken by professionals in the two entities, Rajah added.
Workers' Party non-constituency MP Leon Perera had asked about the Government's role in loans provided by GIC and Temasek to companies battered by the coronavirus crisis.
Source: The Straits Times
GIC is in talks to acquire a stake in StorageMart, which describes itself as the largest privately owned storage company in the world, according to people with knowledge of the matter.
While a deal has yet to be finalised, the potential transaction is slated to value StorageMart at more than $2.5 billion, including debt, some of the people said. Rosewood Investment may participate in the deal, one of them said.
Source: The Straits Times
She was responding to a member of parliament’s question on whether the authorities would consider reducing CPF contributions by both employees and employers, until the economy were to recover from the pandemic.
Source: Channel News Asia
INTERNATIONAL (EXCLUDING ASIA)
Canada’s La Caisse de dépôt et placement du Québec said Asian stocks were a strong driver of its 9.2% investment return last year, but it has flagged macroeconomic and geopolitical concerns, notably related to US-China tensions.
The C$340.1 billion ($252 billion) public pension fund said its growth market mandate returned 17.2% in 2019, with Chinese stocks generating half that return.
However, CDPQ is concerned that things will get trickier now: “Despite the US and China reaching a trade truce at the end of 2019, relations between the two world powers are far from optimal. In fact, the Chinese-US rift on technology issues, higher tariffs, unpredictability of rules governing international trade, investments flows and erosion of multilateralism could be here for good.”
Source: CDPQ
Munich Re’s Ergo insurance unit is entering China’s property and casualty insurance market with a 24.9% stake in Taishan Property & Casualty Insurance through a capital increase, the German insurer said on June 8.
“We could imagine increasing our stake in the future,” Ergo China chief executive Juergen Schmitz told Reuters.
Source: Reuters
The UK’s £75 billion ($89 billion) university pension fund plans to stop investing – and, where necessary, divest – from tobacco manufacturing, coal mining and certain weapons makers
USS Investment Management, which manages the Universities Superannuation Scheme, the UK's biggest retirement fund, concluded that traditional financial models had not taken specific risks into account, such as changing political and regulatory attitudes and increased regulation that could damage the prospects of businesses involved in these sectors in the years to come.
Source: USS