Weekly investor roundup: Cathay Financial expects rate hikes to boost returns; NPS' enlarged stewardship role faces pushback
TOP NEWS OF THE WEEK:
Lee Chang-ken, the president of Cathay Financial Holdings is anticipating a string of interest rate increases from the US Federal Reserve that will boost profits further after a record year.
In an interview, he said that he “really likes inflation” and was looking forward to the rate raises. He added that he hopes the Fed would raise rates eight times each by two percentage points over the next three years.
Cathay Financial reported a surge in preliminary net income to a record NT$140.6 billion ($5.1 billion) in 2021 and its chief investment officer Sophia Cheng had said that higher rates would benefit the firm’s new investments and insurance division.
Source: Bloomberg
National Pension Service’s (NPS) move to enlarge its stewardship role has met strong protest from the country’s business community, after its new guideline could allow it to hold listed companies and their subsidiaries liable for negligence resulting in shareholders’ losses.
According to a draft of a revised bill on fiduciary duty activity guidelines obtained by Maeil Business Newspaper on Thursday (January 13), the government is seeking to empower the NPS to exercise its shareholder rights with shareholder derivative action against listed companies in which it holds 1% or more stake as well as subsidiaries in which their parents hold more than 50% stake.
The plan was initiated in late 2021 by the Ministry of Health and Welfare, which oversees the NPS, in a bid to prevent illicit business activities by having the NPS exercise its shareholder rights. NPS said no companies are on its target list and no details concerning the plan have been specified.
But in a joint statement announced by the seven business lobby groups, the involved companies argue it may even target legitimate business activities. NPS owns shares of 5% or more in about 300 companies in Korea.
Source: Maeil Business News; Korea Times
Government Pension Investment Fund (GPIF) has appointed Mitsubishi UFJ Trust and Banking Corporation for domestic private equity investments "multi-manager" strategy, following the request for proposal launched in April 2017.
The mandate is for fund of funds to pursue fund investments and co-investments. Japanese asset manager Alternative Investment Capital is appointed as investment advisor for the mandate, GPIF announced on January 12.
Source: GPIF
GIC is one of the largest investors of Checkout.com’s latest $1 billion Series D funding round.
The fund said in a LinkedIn post that it has invested in every funding round since the startup’s Series A and that it was impressed by the firm’s product innovation and company-centric approach.
Other investors in the latest funding round include Tiger Global Management, Qatar Investment Authority and Franklin Templeton Investments.
Sources: GIC, Crunchbase
OTHER INVESTMENT NEWS:
AUSTRALIA
The merged LGIAsuper and Energy Super have appointed Mark Rider as chief investment officer from Christian Super.
Rider will take up the role and he replaces Troy Rieck who will leave the fund at the end of the month alongside several others in the investments team. It is unclear where Rieck will be heading next.
The superannuation industry has been undergoing consolidation as small and medium funds have been under regulatory pressure to merge. Christian Super was directed by the prudential regulatory to merge by July 31 due to underperformance.
Source: Financial Standard
IFM Investors, which is owned by several superannuation funds, has announced that its private equity portfolio has achieved carbon neutrality and is certified by Climate Active.
The milestone is part of a broader strategy to create long-term value in private equity portfolio companies, said the firm, which also claims that the PE team is the first in Australia to make this achievement.
Source: Financial Standard
CHINA
AIA Group has completed its investment in China Post Life Insurance.
The investment was completed upon receiving all necessary regulatory approvals for AIA’s wholly owned subsidiary, AIA Company Limited, to invest RMB12,033 million ($1,860 million) for a 24.99% equity stake in China Post Life.
AIA’s investment in China Post Life is complementary to AIA’s strategy in China and increases the Group’s exposure to the growth opportunities in the Chinese life insurance market.
Source: AIA
Border to Coast Pensions Partnership, one of the UK’s largest public sector pension pools with over $75 billion in assets under management, has committed a further $1.64 billion to private markets which includes $350 million to two Asia-focused vehicles.
The fund will invest $210 million into Stonepeak Asia Infrastructure Fund, an independent asset manager recognised as one of the largest infrastructure managers globally, focusing its investment on infrastructure assets across Asia within the communications, transport and logistics, and energy transition sectors.
Border to Coast has also committed $140 million to Baring Asia VIII, which provides a strong regional presence across Asian markets with extensive experience in cross-border transactions. The Fund will make Asia-focused buyout and control investments with a focus on operational improvements.
The investments form part of the $3.69 billion private markets programme announced in July 2021 and have been deployed across a range of new infrastructure, private equity, and private credit funds.
Source: Border to Coast Pensions Partnership
HONG KONG
Standard Chartered Bank is acquiring Royal Bank of Canada’s Hong Kong investment services unit, a move that helps it break into the custody market for two major retirement plans.
The unit, RBC Investor Services Trust Hong Kong, provides trustee, fund administration, custody and transfer agency services, among other things, for the Mandatory Provident Fund (MPF), the city’s largest public retirement scheme, and the voluntary Occupational Retirement Schemes Ordinance (ORSO).
Standard Chartered did not disclose the deal size in its January 12 announcement.
Source: Asia Asset Management
INDONESIA
The foundation of Indonesia’s 10th richest family has raised S$200,000 for Loh Kean Yew, the first Singaporean to win the Badminton World Federation World Championships.
The Karim Foundation, backed by the family of Indonesian tycoon Bachtiar Karim who is the executive chair of Singapore-headquartered Musim Mas, an oil conglomerate, noted that the foundation has always had a focus on sports development, art and culture, mental health and education.
The Karim family had a net worth of $3.5 billion as of 2021, making it the 10th richest in Indonesia.
Source: The Business Times
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INTERNATIONAL
The Kuwait Investment Authority (KIA), the world’s third largest sovereign wealth fund with $693 billion in assets under management has absorbed the significant and continuing deterioration in its government’s financial position, which has spared the country a very large increase in debt according to a report by the credit rating agency Moody’s.
In Moody’s report titled ‘Enhancing global commitment to the carbon transition increases credit risk in the long run’, the agency added that the speed of carbon transition paths will lead to increased credit challenges if global regulations and policies change, or investors exit the oil and gas sectors faster than expected — as originally reported by Al-Rai daily.
The report highlights that credit pressures will be particularly significant for Iraq, Kuwait and Oman, and in the longer term for Azerbaijan, Qatar, Abu Dhabi and Saudi Arabia. Moody’s believes Abu Dhabi, Qatar and Saudi Arabia have the strongest ability to adjust policies from the institutional and governance perspective, while Kuwait, Abu Dhabi, Qatar and Azerbaijan have the largest assets of sovereign wealth funds, which will provide the financial means to facilitate adjustment and mitigate its risks.
Source: Arab Times
JAPAN
Toshiba Corp's proposal to split itself into three companies won't solve its governance issues and the conglomerate should prioritise an overhaul of its board and management, said a senior executive at one of Japan's largest pension funds.
Ken Hokugo, corporate governance director at the Pension Fund Association (PFA), said the interests of Toshiba management and shareholders are "not aligned". "The most orthodox solution to the discrepancy is to bring onto the board someone who can monitor and discipline management, and to let the revamped board select the new chief executive," he said in written responses to Reuters queries.
Source: Reuters
KOREA
Koreans born after 1990 will not be able to claim their state pension if an overhaul of the current pension system is not carried out swiftly, one of Korea’s largest economic think tanks said Thursday.
With the nation’s state pension age remaining relatively low compared to other major economies and the lacklustre amount of money being funnelled into the fund, those set to receive the pension from 2055 will likely fail in claiming their contributions, a report by the Korea Economic Research Institute showed.
Source: The Korea Herald
Hotel Lotte, retail conglomerate Lotte Group’s luxury hotel operator, and Korea Overseas Infrastructure and Urban Development Corporation (KIND), a state-run organisation to support global private-public partnerships, jointly acquired Kimpton Hotel Monaco in Chicago for $36 million on Jan 14, Hotel Lotte announced on Monday (Jan 17).
They acquired the hotel from Florida-based real estate investment trust Xenia Hotels & Resort. The deal price is a big drop from $53 million, the hotel’s appraised value in 2013.
Source: Korea Economic Daily
SINGAPORE
A new Singapore law could boost funds managed by sovereign wealth fund GIC by S$185 billion ($132 billion) as the bill will lead to a reduction in foreign reserves held by the Monetary Authority of Singapore (MAS) to 65-75% of GDP.
GIC has typically been able to achieve higher returns through investments rather than maintaining the reserves in liquid assets. In recent years, the fund has reduced its weight in bonds and re-allocated to emerging market equities, real estate and private equity.
Source: Global SWF
Global Processing Services, a global payment technology platform, announced the closing and upsizing of its $300 million initial round on January 13.
With the participation of Temasek, the global investment company headquartered in Singapore and MissionOG, a US-based growth equity firm, the round was upsized by over $100 million and resulted in ultimately raising over $400 million.
GPS is an API-first payment technology platform, which enables innovative card programmes for fintechs, digital challenger banks and embedded finance providers. GPS’ technology and partnership approach has helped scale some of the most successful disruptive fintechs around the world, including Revolut, Curve, Starling Bank, Zilch, WeLab Bank, and Paidy, among others.
The funding round was co-led by growth investors Advent International – through Advent Tech and affiliate Sunley House Capital – and Viking Global Investors.
Source: Global Processing Services