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Weekly investor roundup: Indonesia Investment Authority signs first infrastructure deal; Singapore's MAS tightens family office tax rules

Indonesia's new sovereign wealth fund to invest $2.72 billion in toll roads; Singapore's MAS tightens tax criteria for family offices; Harvard University's endowment among risk-averse US institutional investors looking to reduce commitments in China; and more.
Weekly investor roundup: Indonesia Investment Authority signs first infrastructure deal; Singapore's MAS tightens family office tax rules

TOP NEWS OF THE WEEK:

The Indonesia Investment Authority (INA) has signed an agreement with state-owned construction companies Hutama Karya and Waskita Karya to invest $2.72 billion in the construction of toll roads in Sumatra and Java, the sovereign wealth fund said on April 14.  

The investment marked the fund’s first foray into the country's infrastructure development. The Ministry of Finance estimates that Indonesia needs $449 billion to develop its infrastructure between 2020 and 2024.

Source: Jakarta Globe

Family offices in Singapore will have to meet stricter criteria in areas such as assets under management (AUM), business spending, local investments, and the number of investment professionals on staff to qualify for tax incentives.

The new rules that came into effect on April 18 require a fund managed or advised directly by a family office to have a minimum size of S$10 million ($7.37 million) at the point of application. It must also increase its AUM to S$20 million within a two-year period under section 13O of the Income Tax Act.

Family offices must also employ at least two investment professionals and will be given a one-year grace period to employ the second employee. Prior to the new rules, there was no minimum AUM for funds covered under this section or the minimum number of employees required.

Family offices covered under another section known as 13U – which more broadly covers funds managed in Singapore - must have at least three investment professionals, with at least one being a non-family member.

Source: The Straits Times

In a sign of a potential pullback, Harvard University’s endowment is considering tapering its investments in China, according to a Bloomberg report.

Meanwhile, a pension fund for Pennsylvania state employees has not committed new cash to Chinese private equity funds in the past 12 months, while Florida’s pension system has halted new investments in China as it assesses the risks. 

Such reluctance meant that US dollar-denominated funds that invest in China raised $1.4 billion in the first quarter, the lowest amount for the same period since 2018, and a third consecutive quarter of declines, according to research firm Preqin.

The pullback is hitting even high-profile China names. Ex-Goldman Sachs Group rainmaker Fred Hu’s fund is still $500 million to $1 billion shy of its maximum raise with time running short. 

Source: Bloomberg

 

MORE INVESTMENT NEWS:

AUSTRALIA

Rest Super posted a negative 1.45% return for its core strategy fund in the first quarter of the year, and a negative 1.03% for its default balanced option.

Its chief investment officer Andrew Lill cited volatility, local weather events, and global events such as “military conflict in Europe” that had caused significant market movements.

Gold, infrastructure, and domestic shares had positive returns, but other asset classes such as global bonds and equity fell into negative territory.

The A$60 billion ($44 billion) fund reported 3.16% returns for its core strategy fund and 2.39% for its balanced option for the previous quarter.

Source: Rest Super

Grow Inc announced that it will wind up its superannuation product on May 11, 2022 after five years in the business.

Diversa Trustees, the trustee for the A$47 million Grow Super said that increased regulatory pressure led to the decision as the complexity and costs of administering superannuation funds had grown too much to ensure positive outcomes for members.

Source: Financial Standard

INDIA

Leading sovereign funds including Abu Dhabi Investment Authority, Singapore’s GIC, Qatar Investment Authority, and three Canadian pension funds have shown interest to be anchor investors in India’s Life Insurance Corporation (LIC) initial public offering (IPO).

According to officials in the know, the various funds have shown interest in the IPO – said to be the biggest ever public offer in the country – that is likely to be held toward the end of this month.

The Indian government seeks to raise about Rs 75,000 crore ($9.8 billion) through the LIC IPO. The anchor investment portion is expected to be around Rs 18,000 crore.

Source: The Economic Times, SWFI

Canada Pension Plan Investment Board (CPPIB) and India’s Tata Realty and Infrastructure have formed a $695.8 million (53 billion rupee) joint venture to invest in commercial properties across India.
 
CPPIB, which manages over $437 billion in assets, will invest around $341 million in equity. The joint venture will allocate up to $262 million for future acquisitions, said Canada’s largest pension fund in a statement on April 11.
 
The joint venture will be seeded with two assets located in Delhi — Intellion Park Chennai and Intellion Edge Gurgaon. Both projects are currently owned and managed by TATA Realty and are worth a combined gross asset value of $1 billion.
 
The joint venture would also pursue Grade A commercial developments in key gateway cities in India, with an equity allocation of $262 million (20 billion rupees).
 
Source: CPP Investments

JAPAN

Japanese Prime Minister Fumio Kishida said he is looking to create a pathway that enables funds from the Government Pension Investment Fund (GPIF) -- the world’s largest pension fund with $1.6 trillion in assets -- to flow directly to startups and venture capital. 

He said he wants to attract individual and foreign investments to startups. The country’s IPO process will be reviewed to ensure that startups have access to adequate funding, he said in a meeting on his administration’s New Capitalism policies on April 12.

GPIF told Bloomberg that it had not received details of Kishida’s plans but that the fund can already invest in venture capital funds under Japan's current financial regulations. GPIF did not disclose whether or not it has invested in such assets.

Kishida’s panel on New Capitalism is slated to finalise its policies in June, before the upper house election in July.

Source: Bloomberg

KOREA

South Korea’s Local Finance Association (LOFA) has opened tenders for two $8.15 million (10 billion won) equity fund mandates, one domestic and one foreign.

Both equity fund mandates will focus on public offerings, collective investment schemes, private placements, discretionary funds, and exchange-traded funds. The domestic mandate is benchmarked against the KOSPI 200 and the foreign mandate is benchmarked against the MSCI ACWI Index.

LOFA is a government agency that plays a supportive role in the finances of local governments and mutual aid for South Korean businesses. The government agency manages assets and provides aid for reconstruction efforts following disasters.

LOFA is seeking one asset manager for each mandate, stipulating that the applicants must have at least $80 million (100 billion won) of assets under management, and have not been suspended from business in the last three years. Foreign applicants are also required to have local management personnel in Korea.

Applications are open until April 27 and evaluation and manager selection is scheduled by June 3, according to LOFA’s request for proposal published on the website of the Korea Financial Investment Association on April 13.

Source: Asia Asset Management

MALAYSIA

Malaysia’s sovereign wealth fund Khazanah has completed a placement of 105 million shares in CIMB Group Holdings at RM5.10 ($1.20) per share, raising RM535.5 million ($126.4 million) in gross proceeds, according to a company statement on April 15.

The placement, which trimmed its stake by 1% in the banking group to 24.7%, represents a 3.4% discount to the banking group's closing market price of RM5.28 on April 13.

Khazanah said the latest share placement is part of its ongoing efforts to rebalance its portfolio and recycle its investments into new assets in Malaysia and globally, including new investments under Dana Impak or Impact Fund.

Source: The Edge

SINGAPORE

Digital content monetisation platform Coda Payments said it has raised $690 million from Singapore's sovereign wealth fund GIC, venture capital firm Insight Partners, and New York-based global private equity Smash Capital.

The Singapore-based firm plans to use the funds to expand to more territories through cross-border payments and alternative app stores, Coda said.

London-based private equity firm Apis Partners and all other existing shareholders will retain equity positions in Coda moving forward, the online payment processing firm said.

Source: Reuters

Singapore’s Singlife with Aviva has appointed European sustainability data provider Matter to provide a comprehensive view of its sustainability performance, according to a company statement.

The appointment is part of the financial services company’s wider ESG (environment, social, and governance)-driven mandate and will enable it to understand the sustainability impact and performance of its global investments.

With Matter’s platform, Singlife will be able to monitor key environmental risks to its investments and present more extensive reports to the Monetary Authority of Singapore (MAS) as part of its disclosure requirements in the future.

The company recently announced a S$50 million investment in Altrium Sustainability Fund I — a private equity fund of funds managed by Azalea Asset Management, a Temasek-owned firm — to build an ESG-focused investment portfolio

Source: Singlife with Aviva

The Monetary Authority of Singapore (MAS) has further tightened its monetary policy while also raising its inflation forecast, citing global commodity price increases and supply chain disruptions are adding to domestic cost pressures, according to a company statement on April 14.

The central bank said it will "recentre the mid-point" of the Singapore dollar nominal effective exchange rate (S$NEER) policy band at the prevailing rate, as well as "slightly raise" the rate of appreciation of the policy band. There is no change to the width of the policy band.

In the last 6 months, however, MAS moved to raise the slope of the band twice amid rising inflation, including an off-cycle move in January that surprised the market.

Accordingly, the central bank has raised its core inflation forecast to 2.5% to 3.5% this year, from its January projection of 2% to 3%.

Source: Business TimesMAS

Temasek-backed e-commerce start-up Zilingo has suspended its chief executive Ankiti Bose pending an investigation.

In a media statement on April 13, the Zilingo board said the major investors of the company had authorised it to suspend Bose while an investigation is conducted into matters that surfaced in March. The statement did not mention what the matters of concern are.

Besides the Singapore state investment firm, Zilingo also counts venture capital firms Sequoia Capital and Burda Principal, as well as Singapore's Economic Development Board’s investment arm EDBI, among its investors.

Source: The Straits Times

TAIWAN

Taiwan asset managers earned record income last year, with all but four posting annual gains, according to a review by Keystone Intelligence.

The total net income of the 39 securities investment trust enterprises (SITEs) jumped 44.4% year-on-year to an all-time high of NT$12.6 billion (US$455 million) in 2021. Of the 39 SITES, 35  registered higher income than in 2020.

Operating revenue of the 39 SITEs grew 27.6% to NT$57.43 billion, while their operating expenses rose 23.5% to NT$42.26 billion. The share of revenue from fund management fees dropped to 70.2% from 74.8% in 2020.

SITEs are asset management companies that are set up to raise onshore funds. They can also be master agents for offshore fund brands.

Source: Asia Asset Management

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