Weekly investors roundup: KWAP shops overseas; GIC buys beach resorts; KIC's returns take a dive
TOP NEWS OF THE WEEK
Malaysia’s state pension fund aims to increase its overseas investments as it views this year’s turbulence in the financial markets as an opportunity to buy.
The Kumpulan Wang Persaraan (Diperbadankan), or KWAP, plans to increase the proportion of foreign investments in its portfolio to 30% by 2025 from 20% at present, Chief Executive Officer Nik Amlizan Mohamed said in a Bloomberg TV interview. The pension fund for civil servants held 159 billion ringgit ($35 billion) in assets at the end of 2021.
The plans to increase investments abroad and in the private market space are aimed at helping KWAP meet its goal of raising its annual return to 7% in three years, after clocking 6% a year for the past decade, she said. Eking out returns in today’s world of higher interest rates is going to be challenging.
“The low-interest rate environment that existed for the past decade is no longer there,” she said. “We have to adjust the assumptions we’ve used in our models to take in the ‘new normal’ -- and be nimble.”
Source: Bloomberg
Singapore’s sovereign wealth fund GIC will take a majority stake in Mediterranean luxury beach resort group Sani/Ikos Group (SIG) in a transaction that values the group at €2.3 billion ($2.2 billion).
The transaction is expected to close in the fourth quarter of 2022, subject to customary regulatory approval.
GIC will be buying the stakes from investors that include Oaktree Capital Management, Goldman Sachs Asset Management, Moonstone, Florac and Hermes GPE.
Founders Andreas Andreadis and Mathieu Guillemin will continue to manage SIG as chief executives and co-managing partners, while Stavros Andreadis will become honorary chairman of the Group.
Source: GIC
The Korea Investment Corporation (KIC) posted its worst investment loss in its asset evaluation for the first half of this year. According to data submitted by the sovereign wealth fund to main opposition Democratic Party lawmaker Yang Kyung-sook, the KIC logged a 13.83% investment loss during the first six months of this year.
Given that the KIC's assets stood at around $205 billion at the end of last year, it means that the sovereign fund's evaluated asset has been reduced by around W39 trillion ($28 billion) during the first half of the year.
The sovereign wealth fund's investment loss in overseas stocks stood at 21.17 percent, and in bonds at 14.04 percent. Stocks account for about 40 percent of KIC assets, while bonds take up some 35 percent. The KIC is also estimated to witness losses in alternative investments, including real estate and infrastructure investments, for the first quarter.
Source: Korea Times
OTHER INVESTMENT NEWS
AUSTRALIA
Aware Super has expanded its mandate with Australian insurer TAL to now provide cover to VicSuper members as well.
VicSuper members' group insurance has been provided by MetLife since July 2018, meanwhile Aware Super's members have been with TAL. However, members have been informed that TAL will become the fund's sole insurer with effect from November 3.
The changes being made to the VicSuper coincide with an overhaul of the investment options available to pension members, and several new options are to be introduced in the near future.
Source: Financial Standard
CHINA
Prudential Financial is considering buying a minority stake in ABC Life Insurance, the insurer controlled by Chinese state-owned Agricultural Bank of China, according to people familiar with the matter.
The US insurer is working with a financial adviser as it evaluates making an offer for the stake, the people said, asking not to be identified because the matter is private. The stake sale in Beijing-based ABC Life has also drawn interest from other financial institutions, the people said.
The investors who own about 49% of closely-held ABC Life are exploring a sale of a minority stake, Bloomberg News has reported. A transaction could value the whole life insurance business at about $3 billion to $4 billion, people familiar with the matter said at the time.
The size of the stake that may be sold could range from 20% to 49%, and could also include a so-called bancassurance deal, the people have said. In a bancassurance partnership, an insurer such as ABC Life is permitted to sell its products in a bank’s branches and other retail channels for a set period.
Source: Bloomberg
Julius Baer is making a low-double-digit-million dollar equity investment in GROW, a China-based domestic asset management company, as part of a strategic alliance, the Swiss wealth manager said on Wednesday.
"With this partnership, Julius Baer takes a first step into onshore China and at the same time, GROW's clients will gain access to Julius Baer's global investment expertise," the Swiss bank said in a statement.
Source: Reuters
Global financial firms, still smarting from multi-billion-dollar losses in Russia, are now reassessing the risks of doing business in Greater China after an escalation of tensions over Taiwan.
Lenders including Societe Generale SA, JPMorgan Chase & Co. and UBS Group AG have asked their staff to review contingency plans in the past few months to manage exposures, according to people familiar with the matter. Global insurers, meanwhile, are backing away from writing new policies to cover firms investing in China and Taiwan, and costs for political risk coverage have soared more than 60% since Russia’s invasion of Ukraine.
Source: Bloomberg
Fosun Group, one of China’s largest private conglomerates, is stepping up efforts to pare back investments amid mounting concerns over its debt risks.
Fosun International, the group’s main investment arm, reduced its holding of Hong Kong-traded shares of New China Life Insurance from 5.84% to 4.99% through a block trade Thursday, according to a New China Life filing Monday.
The share sale could total HK$448 million ($57 million) based on New China Life’s closing price Thursday of HK$17.12. Fosun made its first investment in New China Life in 2016 when the company’s Hong Kong shares traded at around HK$22 apiece.
Source: Caixin Global
HONG KONG
One of Asia-Pacific’s biggest insurers sees opportunities in ESG-themed equities and bonds in China as technology loses its appeal as a sustainable investment haven.
AIA Group, which had invested heavily in Big Tech, is now overweight Chinese equities and favors solar, wind and electric-vehicle assets, Chief Investment Officer Mark Konyn said in an interview.
“We’re going to see a very, very significant shift in the energy mix over the next five or so years,” Konyn said, referring to changes in the alternative energy and transport sectors. Green and sustainability-linked bonds “are not a significant part of the program today, but we are looking to get out to the market and let issuers know that we are interested in those types of issuances,” he said.
Hong Kong-based AIA, with $250 billion in assets under management, has 10% of its portfolio in equities and 80% in fixed income. The group is “significantly underweight” China in the Asian offshore bond market, which is dominated by property developers, but has a dedicated portfolio for funding sustainable infrastructure in the region.
Source: Bloomberg
AIA Group is in advanced talks to acquire MediCard Philippines, people familiar with the matter said, as the insurance giant seeks to boost its presence in Southeast Asia.
AIA and MediCard are finalizing the details of a transaction and could reach an agreement in the coming weeks after the Hong Kong-based insurance company outbid other insurers and investment funds, the people said. A deal could value the Philippine company at more than $350 million, the people said, asking not to be identified because the matter is private.
No final decision has been made and talks could still fall apart, the people said. A representative for AIA declined to comment, while a representative for MediCard didn’t immediately respond to requests for comment.
Source: Bloomberg
Chubb is in advanced talks to form an insurance partnership with Hang Seng Bank, a Hong Kong-based lender majority owned by HSBC Holdings, according to people familiar with the matter.
The parties are hammering out the details of a transaction that could be agreed over the coming weeks, the people said, asking not to be identified because the matter is private. Chubb, based in Zurich, is poised to become Hang Seng Bank’s insurance partner after outbidding other insurers that had shown interest in the tie-up, the people said.
A deal would help the world’s largest publicly-traded property and casualty insurance company boost its presence in the Asian financial hub, the people said. Talks are ongoing and could still fall apart, the people said.
Source: Bloomberg
KOREA
Korea’s central bank (BOK) said on September 23 that it was setting up a currency swap arrangement with the National Pension Service (NPS) to divert some of the fund’s foreign currency needs, in a bid to put a floor under the rapidly weakening won.
“The NPS can secure funds needed for overseas investment without counterparty risks, and the deal is also expected to stabilise currency market by easing the fund’s US dollar demand from the spot FX market,” the BOK said in a statement.
The Bank of Korea and the NPS said the $10 billion currency swap deal will last through the end of this year to allow the fund to access the bank’s FX reserves. The won weakened to more than 1,400 per US dollar in the week of September 19 for the first time since 2009 - a 16% decline for the year. The won has been one of the hardest-hit emerging market currencies against a surging US dollar.
Source: Yonhap News Agency
Global private equity firm Cinven has attracted €550 million ($551.3 million) from Korean institutional investors for its eighth flagship fund launched in March with a €12 billion target, according to investment banking sources.
Key Korean investors include the National Pension Service and sovereign wealth fund Korea Investment Corporation, which have committed €200 million and €150 million, respectively.
Samsung Asset Management, The Korean Teachers’ Credit Union, Korean Federation of Community Credit Cooperatives, Woori Bank and other investors have committed an aggregate €200 million.
Source: Korea Economic Daily
Woori Financial Group aims to push ahead with the expansion of its non-banking business portfolio, but the financial group's recent attempt to acquire BNP Paribas Cardif Life could not overcome the board's opposition.
According to the investment banking industry, Woori Financial has been positively reviewing the option of acquiring the life insurance company in recent months. However, the financial group's board is opposed to the acquisition plan on the grounds that the timing isn't right, saying more life insurance firms are expected to be up in the M&A market with the slated adoption of new IFRS17 accounting standards from the next year.
BNP Paribas Cardif has been attempting to sell its life insurance affiliate in Korea since July. BNP Paribas Cardif holds an 85% stake in its life insurance affiliate, whose assets total W3 trillion ($2.15 billion). The life insurer is ranked 21st out of a total of 23 life insurers in Korea.
Source: Korea Times
MALAYSIA
Khazanah Nasional is exploring potential investment opportunities in emerging markets in South-East Asia and India.
Khazanah Nasional managing director Amirul Feisal Wan Zahir said the national sovereign wealth fund is seeking for the right time to invest and capitalise on opportunities to leverage on its global presence and networks.
“We look at strategic asset allocations and it’s just a question of when and where,” he said during a MIDF Conversations webinar yesterday, adding fund has is eyes now on South-East Asia and India.
He added the United States is still an attractive market but is uncertain about when China is going to open up.
Source: The Star
PHILIPPINES
The Social Security System (SSS) is looking for potential partners to shoulder contributions of the agency's members “who are having a hard time” for at least six months.
The programme will cover selected members of the SSS like job-order workers, informal sector workers, and land-based overseas Filipino workers who lost their jobs due to the pandemic.
SSS said a contribution subsidy provider could be a private or government individual or group willing to subsidise the contributions of the chosen members.
Source: Metro Manila
SINGAPORE
China Vanke, the nation’s third-biggest property developer by sales, has attracted six cornerstone investors including Temasek Holdings and hedge funds managed by UBS Group to the initial public offering (IPO) by its property services unit in Hong Kong.
The Shenzhen-based developer is seeking to raise as much as HK$6.15 billion (US$784 million) by selling 116.7 million shares in its unit Onewo Inc, according to a stock exchange filing on Monday. The shares are being marketed at HK$47.10 to HK$52.70 each.
Source: South China Morning Post
Singapore state investment firm Temasek is leading a $40 million funding round in Well-Link Technologies, alongside existing shareholders Future Capital and CDH Venture and Growth Capital.
The tech firm also counts Chinese tech company Xiaomi and Chinese gaming star miHoYo as investors, according to business database Tianyancha.
The Singapore firm’s publicly disclosed exposure to China has declined over the last two years, from 29% in 2020 to 22% as of this March. As of last week, Temasek had only participated in eight China financing deals, down from 41 last year, according to Dealogic.
Source: CNBC
TAIWAN
Taiwan’s financial regulator has given the green light for the first takeover among the 16 listed financial holding companies on the island.
The Financial Supervisory Commission (FSC) approved Fubon Financial Holding’s acquisition of rival Jih Sun Financial Holding nearly two years after the deal, estimated at around NT$44 billion (US$1.4 billion), was first announced.
The cash takeover of the 26% of outstanding shares in Jih Sun Financial is expected to be completed by the end of the year, the FSC says in a statement on September 20.
Fubon Financial is the parent of Fubon Asset Management, the fourth largest of Taiwan’s 50 asset management firms.
Source: Asia Asset Management