Insto roundup: EPF mulls $110m property sale; Florida pension puts $188m in Asia funds
GLOBAL
The consensus among sovereign wealth funds is that they – and other investors – need to take immediate action to mitigate the effects of climate change, but only 36% have a formal climate strategy in place, finds new research by the International Forum of Sovereign Wealth Funds (IFSWF).
Of the 34 SWFs surveyed, 88% said they took climate change into account in their investment processes in some way, though the IFSWF survey highlighted some sharp differences between how systematic and sophisticated these approaches are. Of those funds with a formal climate policy in place, 55% have adopted it since 2015 and 30% since 2018.
Three in 10 of respondent institutions have more than 10% of their portfolios invested in climate-related strategies, suggesting some funds are indeed shifting capital, although there is scope for accelerating action.
Source: IFSWF
AUSTRALIA
Westpac bank is set to move forward with the sale of its A$1.8 billion ($1.38 billion) life insurance business.
According to Bloomberg, the Australian bank has approached AIA Group, Dai-ichi Life Holdings, and Meiji Yasuda Life Insurance to gauge potential interest.
Westpac had previously sold its general insurance business to Allianz SE for A$725 million.
Source: Bloomberg
Aware Super invested in a new affordable housing development with an estimated value of A$300 million ($230 million) in a Sydney suburb.
The site is expected to start construction in mid-2022 and be developed into 300 affordable housing units for essential workers including teachers, nurses, aged care and disability support workers, and childcare employees, as well as office and retail space.
The development is also supported by real estate investment firm Altis Property Partners.
Source: Aware Super
Insurance group QBE has hired Sue Houghton from Westpac's insurance arm to be its Australia and Pacific CEO. The role is effective in August, and she replaces Vivek Bhatia, who had left the company last year to join information solutions provider Link Group.
At Westpac, Houghton had led the mortgage insurance, general insurance and life units. The general insurance unit was sold last year and the life unit is currently on sale.
Source: Insurance News
CHINA
Allianz will acquire full ownership of its China life insurance joint venture. Allianz (China) Insurance Holding and Citic Trust have signed an equity transfer agreement for Allianz to acquire 49% shares of Allianz China Life Insurance from Citic Trust. After the transaction, the joint venture will become a wholly owned subsidiary of Allianz (China) Insurance Holding.
Source: Allianz
Ping An Insurance Group said it has a total exposure of Rmb54 billion ($8.4 billion) in China Fortune Land Development as the indebted property developer faces mounting default pressure.
Ping An co-chief executive Xie Yonglin told an earnings conference on February 4 that the company was now leading a creditor committee handling the debts in China Fortune Land, in which the company has a 25% stake.
Source: Caixin
HONG KONG
The Hong Kong government appointed Ayesha Macpherson Lau of accounting firm KPMG to succeed David Wong as chairperson of the Mandatory Provident Fund Schemes Authority (MPFA), superviser of the HK$1 trillion ($128.2 billion) Mandatory Provident Fund. The appointment is two years with effect from March 17.
Lau, who has been serving MPFA as non-executive director since 2017, will retire from KPMG in September 2021 to devote more time to her role as MPFA chairperson.
Source: MPFA
At the end of December, assets in Hong Kong's mandatory provident funds amounted to HK$1.14 trillion, of which HK$410 billion (36%) was investment returns, net of fees and charges.
In 2020 alone, the MPF system registered a return of 11.7%. The annualised return was 4.8% since its inception in 2000, 0.7 percentage points higher than in 2019, outperforming the inflation rate of 1.8% over the same period.
Elsewhere, MPFA on February 2 named the local technology company as the winner of the tender to develop the eMPF and said the platform was scheduled to be built by the end of 2022 and become fully operational in 2025.
Source: MPFA
INDONESIA
Foreign investors into Indonesia’s new sovereign wealth fund are set to enjoy new tax incentives, under new government plans.
Foreign investors in Indonesia are subject to a 20% income tax on dividends. However, investors in the new infrastructure-focused wealth fund will instead only be subject to a 7.5% income tax on dividends, the finance minister Sri Mulyani announced at a hearing. The current average for countries with double tax avoidance agreements in place is 10%.
Incentives will also apply to earnings that foreign investors in the sovereign wealth fund gain from liquidation of assets.
Source: DealStreetAsia
JAPAN
The Government Pension Investment Fund reported investment gains of ¥10.4 trillion ($100.7 billion) for its fiscal third quarter ended December 31, raising its assets under management to a record ¥177.7 trillion.
It earned ¥836 billion in interest and dividend income for the period, which represents an investment return of 6.3%.
Source: GPIF
KOREA
Korea Investment Corporation's (KIC) investment income rose to $21.8 billion last year from $20.2 billion in 2019, or an annual investment return of 13.7%, as financial markets rallied on the back of monetary policy easing and stimulus packages to stem the economic fallout from the coronavirus crisis.
The gain raised KIC’s assets under management to $183.1 billion as of December from $157 billion a year earlier. The sovereign wealth fund's mainstream investments, including bonds and stocks, returned 14.6%, outperforming their benchmarks by an average 144 basis points. Alternative investments such as real estate and hedge funds, which account for 15.3% of KIC’s assets, returned 7.7%.
KIC also reiterated its plans to open an office in San Francisco by June, its fourth overseas branch after Singapore, London and New York, and to delve into venture capital investment in the second half of the year.
Source: Asia Asset Management
Korea's Public Officials Benefit Association (Poba) hired local alternatives manager Koramco Asset Management for a W300 billion ($269 million) domestic real estate mandate. It comes just weeks after the pension fund appointed London-based AEW UK Reit in December for a $100 million listed property mandate.
Koramco will invest the money in a blind pool fund to buy office buildings in Seoul and the neighbouring Bundang business district in Gyeonggi province. About 60% of the fund will be allocated for large office buildings and 40% for mid-sized offices and value-added investment strategies.
The fund will pay a dividend of 5% a year, while its targeted internal rate of return is 7% over a 13-year investment period.
Source: Asia Asset Management
Korea Post is inviting local fund managers to bid on a socially responsible domestic equity mandate of unspecified value for its insurance unit.
The investments will be into active funds with a socially responsible theme and will be benchmarked against the Kospi Total Return Index. Investments in passive and alternative strategies, including exchange-traded funds and venture funds, will be excluded.
The W134 trillion ($119.9 billion) Korean fund will select up to four managers for a one-year period each for the mandate, following an application period that ends on February 16. Applicants must have experience managing equity funds of at least W50 billion ($4.45 million) in size. Due diligence and manager selection is scheduled for March.
Source: Asia Asset Management
Korean life insurers cut their overseas investment a sizable extent last year because low interest rates continued in the wake of Covid-19 and exchange rate fluctuations led to more currency-hedging costs.
The value of foreign-currency marketable securities of 24 South Korean life insurance companies fell by W1.1 trillion to W102 trillion ($90 billion) in November last year, and the ratio of foreign-currency marketable securities to their total assets under management fell 0.3 percentage points to 17.6% that month, according to the Korea Life Insurance Association.
In one example, the foreign-currency marketable securities of Hanwha Life Insurance fell from W28.12 trillion to W20.62 trillion between February and November.
Source: Business Korea
MALAYSIA
Malaysia's Employees Provident Fund (EPF) is weighing up the sale of up to $110 million of real estate. These include up to seven local assets, including office buildings it currently occupies, a retail property asset and a seaside hotel.
In response to media enquiries, the MYR1 trillion ($246 billion) fund said its decision to buy or sell real estate “will also take into consideration the fund's overall portfolio strategy and the long-term health of the fund".
Source: DealStreetAsia
MIDDLE EAST
Qatar Investment Authority and Glade Brook Capital Partners led a $100 million funding round for India’s VerSe Innovation, parent company of news aggregator Dailyhunt and short-video platform Josh.
Canaan Valley Capital and existing investor Sofina Group also participated. This comes after VerSe raised $100 million in December from Google, Microsoft and AlphaWave.
Source: Exchange4Media
NEW ZEALAND
New Zealand Superannuation Fund committed NZ$100 million ($72 million) to become a cornerstone investor in a new investment fund dedicated to local companies seeking international growth in high-margin sectors.
The fund, titled Pioneer Capital Partners IV, is managed by Auckland-based Pioneer Capital and is expected to be around NZ$260 million in size.
Source: NZ Super
SINGAPORE
Temasek’s private equity impact arm ABC World Asia led a $24 million, Series B financing round in Vietnamese dental care operator Kim Dental. Existing investor Aura Private Equity also participated in the round.
The investment was made via ABC World’s inaugural $405 million fund, which counts amongst its investors Temasek, Temasek Trust, Pavilion Capital, Mapletree Investments, Seatown Holdings, Sembcorp Industries and Singapore Power.
Source: ImpactAlpha
Sovereign wealth fund GIC agreed to invest in clinical research and testing firm Novotech from private equity firm TPG. Venture capital firm Sequoia and healthcare consortium Kaiser Foundation Hospitals are also acquiring stakes in the company. TPG is looking to sell around 10% Novotech in a transaction that values the company at over $2.3 billion.
TPG is selling at least 10% of Sydney-based Novotech, which it acquired in 2017. Novotech has seen annual revenue increase by over 30% since then. The firm carries out clinical trials for Covid-19 vaccines, as well as other drugs.
Novotech plans to IPO in Hong Kong later this year.
Source: Bloomberg
Singapore’s Temasek invested in North Carolina-based gene editing food company Pairwise as part of a $90 million Series B funding round led by agrifood venture capital firm Pontifax AgTech and private equity firm Deerfield Management. Existing investor Leaps by Bayer also participated in the round.
Mission-driven Pairwise uses genome-editing CRISPR technology to improve the taste, convenience or shelf life of fruits and vegetables. It raised a $25 million in Series A round in March 2018, led by Deerfield and Leaps by Bayer.
Source: Sovereign Wealth Fund Institute
Temasek and Singapore Press Holdings (SPH) agreed to merge their meetings, incentives, conventions and exhibitions (Mice) subsidiaries. SingEx Holdings, wholly owned by the sovereign wealth fund, and Sphere Exhibits, wholly owned by the media entity, will merge to form SingEx-Sphere Holdings.
Temasek will be a majority shareholder, with 60% ownership of the new company. Its pro forma book value is expected to be around S$12 million ($9 million), while the agreed transaction value of 40% of SingEx-Sphere is S$24.4 million. SPH publishes national newspapers Straits Times and Business Times and is listed on the Singapore Stock Exchange.
The announcement said the new company aimed to be a regional market leader for hybrid events. Singapore’s Mice industry has been hard hit by Covid-19 and plummeting visitor numbers.
Source: Business Times
Temasek led a $75 million series D funding round in Canadian carbon capture firm Svante.
Existing investors OGCI Climate Investments, BDC Cleantech Practice and Chevron Technology Ventures participated in the round, as did new investors Chart Industries, Carbon Direct and Export Development Canada.
Svante’s technology traps industrial carbon dioxide at the point of emission. The company said the new funds would be used to further a variety of new initiatives over the next three years.
Source: DealStreetAsia
TAIWAN
Yu Nai-wen, together with other 16 defendants, was sued by Taiwan government over accepting bribes within island’s largest pension fund, Bureau of Labor Funds.
Yu, head of the domestic investment division of the Funds, was in November last year detained on suspicion of accepting bribes to ask securities brokers to purchase certain stocks using ministry funds.
Source: Liberty Times
Cathay Life Insurance committed a total of $146.2 million to two investment vehicles managed by Blackstone and EQT, according to filings with the Taiwan Stock Exchange.
The insurer allocated €80 million ($96.2 million) to EQT’s fifth infrastructure fund, for which the Swedish manager had set a hard cap of €15 billion.
Cathay Life will put $50 million into Blackstone Strategic Capital Holdings II, for which the US manager had already raised $3.5 billion (87.5% of the funding goal) by July 2020.
Source: DealStreetAsia
INTERNATIONAL (EXCLUDING ASIA)
The State Board of Administration of Florida (SBAF) committed $188 million to two Asia-focused funds in the last quarter of 2020.
The US state pension fund will invest ¥4 billion ($38 million) and $150 million to private equity funds managed by Nippon and Actis, respectively. Nippon’s NIC Fund II will focus on providing growth capital whilst Actis Energy V will target wind and solar projects across Latin America, Africa and Asia.
SBA has $209 billion under management and also oversees the $170.4 billion Florida Retirement System. It has previously committed to other Asia-focused funds, including Asia Alternatives Florida Investor III and CBRE Asia Value Partners V.
Source: DealStreetAsia
San Francisco Employees’ Retirement System has approved a commitment of $48 million to two investment vehicles launched by Chinese biomedical venture capital firm Lilly Asia Ventures.
Source: DealStreetAsia