Weekly Digest: Temasek named in FTX lawsuit in US; New Super fund merger
Editor's Note: This feature's title has been changed to Weekly Digest from Weekly Roundup.
TOP NEWS OF THE WEEK
Singaporean investment company Temasek has been named in a class action lawsuit filed in Miami, Florida, as one of 18 defendants that allegedly conspired with troubled cryptocurrency exchange FTX to defraud customers.
The complaint was filed last week by one of the exchange’s customers, Connor O’Keefe, a Mississippi resident, on behalf of himself and “all others similarly situated”.
The suit claimed that “defendant venture capital firms wielded their power, influence and deep pockets to launch FTX’s house of cards to its multibillion-dollar scale”.
Source: Straits Times
Commonwealth Bank Group Super has entered into a Memorandum of Understanding to pursue a merger with Australian Retirement Trust, one of Australia’s largest super funds.
This merger would see Commonwealth Bank Group Super’s 67,000 members and A$12.3 billion funds under management transfer to Australian Retirement Trust, which has more than A$230 billion in funds under management.
Commonwealth Bank Group Super's trustee, Commonwealth Bank Officers Superannuation Corporation, said it recognised the importance of exploring strategic opportunities to ensure the fund's continued success, cognisant of the increasing significance of scale in providing sustainable long-term returns for members.
Source: Commonwealth Bank Group Super
OTHER INVESTMENT NEWS
Australia's sustainable pension expenditure stands out as a leader compared to other advanced economies' retirement income systems, according to a report published on February 23 by the Association of Superannuation Funds of Australia (ASFA).
For many advanced economies of the OECD, poor system design, population ageing, and elevated inflation are imperiling the long-term sustainability of retirement income systems.
In many of these OECD retirement systems, the average government spending on pension payments is expected to rise from 9% to 10.4% of GDP over the next four decades. Comparatively, Australia’s government pension expenditure is relatively low and is expected to decline – from 2.6% to 2.1% of GDP by 2060.
While many other OECD countries face politically difficult reforms to improve sustainability of retirement income systems, Australia’s system is well placed to face challenges to sustainability said the report.
China's banking and insurance regulator has approved setting up a life insurance firm to take over the assets and liabilities of Huaxia Life Insurance, the regulator's publication said on February 24.
The new company will be called Ruizhong Life Insurance.
Huaxia Life Insurance was one of nine firms formerly under the control of Chinese-Canadian billionaire Xiao Jianhua's Tomorrow Holdings group. The firms were seized by Chinese regulators in July 2020 in a crackdown on risks posed by financial conglomerates.
Source: Reuters; China Banking and Insurance News
UBS Group is preparing to apply for a mutual-fund license in China, according to people familiar with the matter, becoming the latest Western bank to take advantage of Beijing’s relaxed rules on foreign financial institutions.
The Swiss bank has held informal communications with the China Securities Regulatory Commission about its intention to apply, and plans to submit the application as soon as possible, some of the people said.
Source: Wall Street Journal
Missing Chinese investment banker Bao Fan was preparing to move some of his fortune from China and Hong Kong to Singapore in the months leading up to his disappearance, according to four people with knowledge of his plans.
The billionaire founder and chair of investment bank China Renaissance, who brokered some of China’s biggest tech deals, was establishing a family office in the city-state to manage his personal wealth in the final months of 2022, the people said.
“Like many wealthy Chinese since the tech crackdown in China and during the pandemic lockdown, he was trying to diversify his wealth in Singapore,” said one of the people.
Source: Financial Times
The Securities and Futures Commission (SFC) launched a consultation on the proposed requirements for operators of virtual asset trading platforms.
Under a new licensing regime to take effect on June 1, 2023, all centralised virtual asset trading platforms carrying on business in Hong Kong or actively marketing to Hong Kong investors will need to be licensed by the SFC.
As part of the consultation, the SFC is seeking views particularly on whether to allow licensed platform operators to serve retail investors, and if so, the measures to be implemented in addition to the proposed range of robust investor protection measures, which include ensuring suitability in onboarding clients and token admission.
Source: Securities and Futures Commission
The Insurance Regulatory and Development Authority of India (IRDAI) chairman Debasish Panda said the use of modern technologies including ChatGPT, web 3.0 and public blockchain would encourage the insurance sector to innovate and build instant and customised insurance offerings.
This underscores the prospects for insurtech startups, which are experiencing growing interest from venture capital firms.
Indonesia Investment Authority (INA) is investing in PT Pertamina Geothermal Energy’s (PGE) IPO, underscoring its intention to actively participate in the development of the green energy sector.
The sovereign wealth fund did not disclose financial details of its investment.
Indonesia is considered one of the countries with significant geothermal energy potential, with an estimated resource of 24 gigawatts (GW) of geothermal power generation. The country has an installed capacity of around 2.3 GW of geothermal energy, accounting for less than 10% of total known potential.
Indonesia Investment Authority (INA) and Silk Road Fund have closed their investment in PT Kimia Farma Tbk (KAEF) and PT Kimia Farma Apotek (KFA) as their first investment in Indonesia’s healthcare industry.
INA and SRF, with the conclusion of this final stage, have officially become the strategic investors of KAEF and KFA by subscribing to KAEF’s MCB (mandatory convertible bonds) rights offering and by acquiring a 40% stake in its subsidiary, KFA.
In June 2022, INA and SRF signed an investment framework agreement to facilitate their investment cooperation in Indonesia to enhance economic cooperation between the People’s Republic of China and Indonesia.
Institutional investors like National Pension Service (NPS) and the Korean Teachers’ Credit Union (KTCU) are highly likely to invest in European private equity giant CVC Capital Partners’ ninth buyout fund, which targets $25 billion, investment banking sources said.
The pension funds are each positively considering investment of W100 billion to W300 billion ($77 million to $231.1 million), sources said.
Sovereign wealth fund Korea Investment Corporation (KIC) has decided not to make a commitment, according to sources.
The Luxemburg-based PE firm is set to close the buyout fund, focused on North America and Europe, by June of this year. The two Korean pension funds have both invested in CVC Capital’s previous vehicles.
Source: Korean Investors
Korean telecom giant KT’s CEO Ku Hyeon-mo has decided not to seek a second term after mounting pressure from its biggest shareholders, and especially Korea’s National Pension Service (NPS), for a transparent process in selecting a candidate to lead KT for the next three years.
Ku had expressed a strong willingness to serve a second term amid the government’s growing pressure for innovation on such companies as KT, POSCO Holdings Inc. and financial holding companies, where there are no clear dominant shareholders. Attention is now turning to whether Ku’s departure will set off a chain reaction in other similar ownership companies.
Ku’s withdrawal from the ongoing review process to pick a new KT CEO comes as the company’s largest shareholder NPS voiced opposition to endorsing him as the sole candidate. NPS held a 10.13% stake in KT as of December 27 last year.
Source: Korea JoongAng Daily
Sovereign wealth fund Khazanah Nasional will allocate RM6 billion ($1.3 billion) to the Dana Impak portfolio, which seeks to build economic competitiveness.
The wealth fund will also lead the formation of the National Heritage fund to attract private sector participation.
The National Heritage Fund is a public-private partnership initiative which aims to restore and rejuvenate historic heritage buildings.
This includes redevelopment of the Sultan Abdul Samad Building and Carcosa Sri Negara, which will be executed in collaboration with ThinkCity, a consultancy and project delivery entity founded by Khazanah.
Finance Secretary Benjamin Diokno has said the Maharlika Investment Fund (MIF) will be a tool for economic development.
“The Maharlika Investment Fund, which shall be the country’s first-ever sovereign investment fund, is designed to promote economic development by making strategic and profitable investments in key sectors,” he said.
In the near and medium term, the passage of the MIF will widen the country’s fiscal space and ease pressures in financing public infrastructure projects.
“The Fund is an additional vehicle that would allow the government to tap surpluses that cannot be utilised under current legal frameworks. It will also be open to co-financing with foreign investors and multilateral institutions to facilitate financing of capital-intensive big-ticket infrastructure,” Secretary Diokno added.
“The proposed Fund will adhere to the Santiago Principles, which pertain to the generally accepted principles and practices to ensure the effective operations of sovereign wealth funds globally, and will be governed by the relevant investment and risk management guidelines,” Secretary Diokno explained.
The MIF bill is currently pending at the committee level in the Senate.
Source: Department of Finance
Cathay Life Insurance, the insurance subsidiary of Taiwanese conglomerate Cathay Financial Holdings, has disposed its stake in a fund managed by the US-based investor Dragoneer Investment Group.
In an amended regulatory filing, the insurer disclosed that it sold its stake in Dragoneer Global Offshore Feeder II for about $20.3 million, resulting in a gain of $10.1 million. Cathay Life had earlier said it was selling $20.4 million worth of shares in the fund for a $10.3 million gain.
REST OF THE WORLD
Caisse de dépôt et placement du Québec (CDPQ) posted its first negative annual return since the global financial crisis in 2008. The Canadian pension fund reported investment losses and a drop in net assets for 2022 on February 23.
CDPQ's investments were down 5.6% for the year ended December 31, compared with a 13.5% return for full-year 2021. Annual net assets fell by $13.31 billion (C$18 billion) year-over-year to $295 billion (C$402 billion) as falling values in fixed income experienced a sharp downturn due to the fastest monetary tightening seen in decades.
CDPQ also suffered a $150 million loss due to its investment in crypto firm Celsius, which filed for bankruptcy in July 2022.
Canada Pension Plan Investments Board (CPP Investments) reported a rise in its net assets in its fiscal quarter ending on December 31, 2022 - helped by gains in private equity, real estate and credit investments.
Among these investments, the $396 billion (C$536 billion) fund reported that it had committed $1.2 billion to Asian funds in 2022.
Notably, CPPIB committed $300 million to the fifth Asia fund of private equity firm Bain Capital, and $100 million to the Baring Private Equity EQT Mid-Market Growth Fund during the quarter.
The Canadian pension fund also committed $205 million to become an anchor investor in the $600 million IndoSpace Logistics Park IV, managed by real estate company IndoSpace.
Source: CPP Investments