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China Investment Weighs German Gas-Station Operator

Posted on 01 July 2015 by VRS  |  Email |Print

China Investment Corp. is in the running to buy a German highway rest-stop and gasoline-station company that could be valued at about €3 billion, or $3.37 billion, which would be by far the largest Chinese acquisition in Germany, according to people familiar with the matter. The potential bid is the latest sign of the sovereign-wealth fund’s ambitions to boost direct investments in overseas assets.
U.K.-based private-equity firm Terra Firma Capital Partners bought Tank & Rast in 2004 for €1 billion from investors led by Allianz Capital Partners, Apax Partners and Lufthansa. Terra Firma sold half of its stake in the company to Deutsche Bank’s investment arm RREEF. Both are asking suitors to place binding bids by the end of July, people familiar with the transaction said………………………………………..Full Article: Source

Current trends among GCC sovereign wealth funds

Posted on 24 June 2015 by VRS  |  Email |Print

Swelled by oil revenues the region’s sovereign wealth funds remain among the biggest players in the asset management sector despite the recent drop off in oil prices. Mena Fund Manager looks at current trends among the state-owned funds. The sovereign wealth fund (SWF) sector has continued to grow in recent years. With coffers swelled by commodity revenues, the funds have branched out into new asset classes and sought out new investment opportunities.
London lobbying group TheCityUK said SWF assets had grown to $7.1trn during 2014 in its latest survey of the sector. It remains small in comparison with the global mutual, pension and insurance fund sectors, but a significant sector nonetheless………………………………………..Full Article: Source

Norway’s coal exit creates ripples

Posted on 23 June 2015 by VRS  |  Email |Print

While this decision by the fund could inspire other large investors, the fossil fuel divestment movement has already been building up considerable steam. When the world’s largest sovereign wealth fund decides to exit investments in coal, the ripples of the decision can be felt the world over.
Late last month, Norway’s parliament decided that the $900-billion sovereign wealth fund should exit from utilities and miners that get 30 per cent of their business from coal, a move that could trigger as much as $5 billion of divestments………………………………………..Full Article: Source

CFAs thrive in Abu Dhabi as sovereign wealth funds trump Wall Street banks

Posted on 23 June 2015 by VRS  |  Email |Print

Abu Dhabi wealth funds are recruiting and creating more holders of the Chartered Financial Analyst designation than any other employer in the Middle East as they seek greater control over how the emirates’ wealth is managed.
The Abu Dhabi Investment Authority employs about 130 CFAs, a person with knowledge of the matter said, asking not to be identified as the information is private. Abu Dhabi Investment Company has at least 51. That makes them the two largest employers of CFAs in the region, according to rankings provided by the Charlottesville, Virginia-based CFA Institute………………………………………..Full Article: Source

Sovereign Wealth: Moving the market

Posted on 23 June 2015 by VRS  |  Email |Print

Due to their size, sovereign wealth funds are ideally suited to infrastructure investment. And they have been making their mark. Sovereign wealth funds are making greater inroads into infrastructure investment. Data compiled by Preqin and released last month suggests infrastructure is the most popular of all alternative investment routes for SWFs, with 60% preferring infrastructure as demand grows for capital to finance long-term projects.
“As larger SWFs expand their exposure, we can expect (them) to become an even more important source of capital in the infrastructure market,” says Oliver Senchal, senior commercial analyst at Preqin. “While many of these investors acquire assets directly, many SWFs also access infrastructure through private funds.”……………………………………….Full Article: Source

Norwegian government to slow drawdown of sovereign fund

Posted on 22 June 2015 by VRS  |  Email |Print

The Norwegian government is to be more cautious in drawing down the Government Pension Fund Global (GPFG) over concerns the sovereign wealth fund’s size will be hit by market uncertainty.
The Ministry of Finance said the addition to the fiscal rule – which stipulates that transfers from the fund be in line with its expected 4% return target – were necessary so that governments knew how to apply it when the value of the fund fluctuated widely in value………………………………………..Full Article: Source

Oman Wealth Fund Looks Beyond Oil

Posted on 18 June 2015 by VRS  |  Email |Print

Oman, the largest Arab oil producer that’s not an OPEC member, is considering taking equity stakes in logistics, shipping and tourism as its sovereign wealth fund seeks to diversify government income from crude. Oman Investment Fund, which has holdings in Italy to Vietnam and is a shareholder of the Dubai Mercantile Exchange, wants to invest in companies in Oman and abroad that are mainly outside the oil industry, says Fabio Scacciavillani, chief economist at the state-owned fund.
The fund is focusing on logistics, shipping and tourism as those industries are areas in which Oman has an advantage given its location on shipping routes connecting Europe and the Americas to Asia, he said. He didn’t disclose details on future investments………………………………………..Full Article: Source

UAE SWFs major players globally

Posted on 15 June 2015 by VRS  |  Email |Print

According to the Sovereign Wealth Fund (SWF) Institute, GCC-based SWFs have a total of $2.6 trillion (Dh9.54 trillion) in assets — about 37 per cent of total SWF assets worldwide. Close to 80 per cent of SWF assets in GCC states are accounted for by three major players — the Abu Dhabi Investment Authority (Adia) with $773 billion, foreign holdings at the Saudi Arabia Monetary Authority (SAMA) at $757 billion and the Kuwait Investment Authority with $548 billion. By assets, Adia and Sama are the second and third largest SWFs globally.
The UAE has seven large SWFs in total: four in Abu Dhabi, one each in Dubai and Ras Al Khaimah, while the last is a federal fund. By number of funds, this is more than any other country in the GCC and globally, second only to the US which has several smaller-sized state-level SWFs………………………………………..Full Article: Source

1MDB seeks investors for Bandar Malaysia project

Posted on 15 June 2015 by VRS  |  Email |Print

1Malaysia Development Bhd (1MDB) is seeking equity investors for its 495-acre Bandar Malaysia project and will launch a request for proposal (RFP) in the next two weeks. 1MDB president and group executive director Arul Kanda Kandasamy said launch of the RFP for its subsidiary Bandar Malaysia Sdn Bhd comes on the heels of the rationalisation plan presented to Cabinet on May 29.
“Having generated considerable local and global interest, the objective of this RFP process is to select qualified equity investors to partner in the overall development,” its president and group executive director Arul Kanda said in a statement last Friday………………………………………..Full Article: Source

Sovereign wealth funds turn to internal fund management

Posted on 11 June 2015 by VRS  |  Email |Print

Sovereign wealth funds are relying more on in-house expertise to manage their funds in a drive to bring down costs and improve performance in the low-yield environment, according to a report by Invesco Asset Management released on Wednesday. Although falling oil revenues have dampened inflows into sovereign wealth funds (SWFs) in the Middle East and elsewhere, the sector is still a huge pool of capital.
So sovereign funds’ increasing reliance on their own fund teams is significant for investment banks and asset managers, who have courted SWFs in recent years as other areas of finance suffered in the aftermath of the global financial crisis………………………………………..Full Article: Source

Paul Singer: Big Trouble Ahead For SWFs

Posted on 11 June 2015 by VRS  |  Email |Print

Sovereign wealth funds represent money owned by nations and invested in securities and other assets located generally outside those nations. With trillions of dollars of assets, they have emerged as significant investors in a relatively short period of time. Their appetite for variety in investing has also grown, and now they are among the largest investors in Hedge Funds and private equity funds, in addition to their direct ownership of securities, real estate and other assets.
Even sovereign wealth funds that are unrelated to oil and gas money could be subject to shifting directions in any future crisis-driven market environment, which could cause sudden disruptive capital flows. How the political leaders in these countries will act in a period of market stress is very uncertain, but the potential volatility from such entities does not really lend itself to confident modeling………………………………………..Full Article: Source

Sovereign Wealth Funds’ Picky Behavior in Emerging Markets

Posted on 11 June 2015 by VRS  |  Email |Print

Sovereign funds like the Abu Dhabi Investment Authority (ADIA) and Norway’s Government Pension Fund Global (GPFG) have maintained a strong belief of getting more exposure to emerging markets. This ongoing migration of trying to identify the “right” emerging markets has been challenging. Brazil, once a hot market for sovereign wealth activity, has suffered negative returns in its equity markets.
The MSCI Brazil index for 2014 returned -14.04%, 2013 fared worse at -16.04%. Developing markets like Brazil, sovereign wealth funds will be highly selective when deploying capital. However, certain emerging markets are faring better………………………………………..Full Article: Source

SWFs show growing interest in emerging market infrastructure

Posted on 09 June 2015 by VRS  |  Email |Print

Sovereign funds are increasingly showing an interest in emerging market infrastructure, with an overweight to the specific asset class when compared with overall regional exposure. According to a survey of 50 sovereign wealth funds (SWFs) conducted by Invesco, the asset owners – worth more than $7trn (€6.3trn) – are showing an “affinity” for emerging markets, while their exposure to developed market property is also higher than their overall exposure to the same regions.
The asset manager’s third annual Global Sovereign Asset Management Study found that many of the risks associated with investing in emerging markets – such as corruption, regulatory risk and inadequate legal protection – fell away when investing in infrastructure………………………………………..Full Article: Source

Sovereign funds extend move into infrastructure

Posted on 09 June 2015 by VRS  |  Email |Print

The sharp slide in oil prices and low yields on traditional investments has seen sovereign wealth funds keep increasing their exposure to alternative investments like infrastructure and take on a more direct asset management role, according to a new survey. Invesco’s 2015 Global Sovereign Asset Management Study also found the low oil price was having a bigger impact on flows into North American funds than on those in the Middle East, which are large enough to weather the short term volatility.
“In the Middle East the funds are well established, larger and many were caught out during the financial crisis and so have put in place more governance and risk management policies, including allowing for oil price to fluctuate,” said Nick Tolchard, chair of Invesco’s Global Sovereign Group and head of Invesco Middle East………………………………………..Full Article: Source

SWFs Find Real Assets Edge in Peer Networks

Posted on 09 June 2015 by VRS  |  Email |Print

Working with fellow institutional investors is key to successful deal making—and it is a trend on the rise, according to research from Invesco. In its third annual survey of sovereign wealth funds (SWFs), the asset manager found working alongside peers significantly eased major challenges including sourcing deals, cost, and gaining board approval.
“The trend in sovereign collaboration was observed in our 2014 findings,” said Nick Tolchard, chair of Invesco’s Global Sovereign Group and head of Invesco Middle East. “However in 2015 this collaboration appears to be taken further by certain sovereigns who are developing infrastructure propositions specifically to target other sovereigns.”……………………………………….Full Article: Source

Oil Price Drop Hitting Sovereign Funds: Invesco Study

Posted on 09 June 2015 by VRS  |  Email |Print

A study released Monday by Invesco shows that North American sovereign wealth funds have been hardest hit by the steep drop in energy prices. While sovereign funds in the U.S. and Canada were set up thanks to state surpluses in commodity-rich regions, “the timing of the fall in the oil price has been particularly challenging for state governments” in North America, the report says.
In fact, 80% of North American sovereign investors expect funding to be reduced vs. 42% for oil-funded sovereigns in the rest of the world. Still, North American sovereigns indicate that they are confident their assets are protected from the government. In contract, 67% of sovereigns in countries outside North America with a high dependency on oil expect withdrawals if oil prices remain below U.S. $40 per barrel for two years, according to the research. (Oil traded near $63 on Monday.)……………………………………….Full Article: Source

Lower oil price erodes sovereign wealth funds

Posted on 08 June 2015 by VRS  |  Email |Print

Sovereign wealth funds had their best ever year in 2014 in terms of asset increases, but the falling oil price is expected to slow the future growth of these funds substantially. The assets held by sovereign wealth funds, created to safeguard money for state expenses, increased by a record $1tn in 2014, taking total assets to a high of $7.1tn.
But with the growth of sovereign wealth funds tied closely to the price of oil — 60 per cent of their assets originate from commodity exports — asset growth is predicted to slow in 2015, according to figures from TheCityUK, the financial lobbying group. Assets of sovereign wealth funds grew by 12 per cent on average in the previous five years, but the lobby group predicted asset growth would decelerate to just 4 per cent in 2015………………………………………..Full Article: Source

Middle Eastern sovereign wealth funds fear inflow decline

Posted on 08 June 2015 by VRS  |  Email |Print

More than a third of Middle Eastern sovereign wealth funds expect new funding to decrease as the region adjusts to a period of lower oil prices, research suggests. Invesco’s 2015 global sovereign asset management survey reveals that 38 per cent of Middle Eastern sovereign funds expect such funding to decrease; 31 per cent expect it to stay the same; and 31 per cent see it increasing.
After years of ever-increasing allocations, regional fund managers are adjusting to a low-oil environment that may persist for several years. But the research also highlights the positive outlook from most regional funds, whose governments are seeking long-term returns for future generations or domestic development………………………………………..Full Article: Source

Lamphier: Norway offers few lessons for Alberta

Posted on 08 June 2015 by VRS  |  Email |Print

It’s a seductive fantasy. And since I rarely have one of those when I’m churning out a business column, I’d like a private moment to enjoy it, please. There, that’s very nice. Thank you. Thank you so much. The fantasy? Instead of drowning in deficits, Alberta could be rich. Just like Norway. If that’s not alluring to you, I don’t know what is.
By comparison, the Alberta Heritage Savings Trust Fund is worth just over $17 billion. If you do the math, that makes Norway’s fund about 60 times bigger than Alberta’s rainy-day fund. The implied lesson: Norway has wisely saved its energy riches for the benefit of current and future generations, while Alberta has stupidly squandered its treasure trove, through mismanagement and reckless overspending………………………………………..Full Article: Source

Sovereign Wealth Funds: The Next 10 Years

Posted on 03 June 2015 by VRS  |  Email |Print

Ten years ago, I penned an article (see reprinted text here) in which I examined the phenomenon of large and increasingly active government-owned investment funds. While many of them had existed for decades, there was literally nothing available in the academic or practitioner literature on this phenomenon – not even an agreed term! So after some deliberation, I chose to call them “Sovereign Wealth Funds”.
The timing of my article was opportune, in that the pace of activity in this particular segment was picking up dramatically, and the new name – and especially its 3-letter acronym SWF – seemed to fill a need: new funds were being set up all over the world, assets under management were growing fast, and increasingly the role these institutions were playing in markets was being studied and discussed by policymakers, academics and market practitioners alike………………………………………..Full Article: Source

Abu Dhabi Wealth Fund Changing Tack Amid Lower Oil Prices

Posted on 03 June 2015 by VRS  |  Email |Print

The Abu Dhabi Investment Authority, a sovereign-wealth fund with assets estimated at more than $700 billion, is relying less on external money managers and handling more of its investments in-house—a trend gaining traction at some of the largest managers of national wealth from Norway to Singapore.
Funded by excess revenue from the government of Abu Dhabi, a major Persian Gulf oil producer, ADIA was managing 35% of its money in-house in 2014, compared with 25% in the previous year, according to an annual review released Tuesday. Investors watch ADIA’s allocations and money-management strategies carefully because of the effect a shift by a fund its size could potentially have on asset prices………………………………………..Full Article: Source

Bahrain Sovereign Fund Plans to Beat 2014 Foreign Deal Flow

Posted on 28 May 2015 by VRS  |  Email |Print

Bahrain’s sovereign wealth fund intends to complete more acquisitions this year than in 2014 as it diversifies its international holdings and pursues a goal of doubling in size. Bahrain Mumtalakat Holding Co. completed four acquisitions in 2014, Chief Executive Officer Mahmood Al Kooheji said Wednesday in a telephone interview from Manama.
The fund has already made two acquisitions this year and expects to announce at least two more before the end of 2015, he said. Mumtalakat will continue to focus on co-investing with other firms to expand its $11.1 billion of assets in the next seven years, Kooheji said…………………………………Full Article: Source

Public Pressure Grows On Gulf Countries Sovereign Wealth Funds

Posted on 26 May 2015 by VRS  |  Email |Print

With most of the funds disclosing little information, lawmakers in some countries are looking for poor performance or even wrongdoing. Running sovereign wealth funds in the Gulf has become an awkward business in the era of cheap Crude Oil, as their managers face growing pressure from politicians and the public to prove they’re investing national reserves wisely.
When Crude Oil prices were high, the Gulf funds, some of the largest in the world came under little public scrutiny. Government coffers were full of energy revenues and the financial futures of the Gulf Arab states seemed secure. But with Brent Crude Oil now at little more then 50% last June’s level, the countries may be entering their toughest fiscal times since the 1990’s, and this has changed the political climate………………………………………..Full Article: Source

Libya power struggle threatens the fund’s Goldman, SocGen suits

Posted on 25 May 2015 by VRS  |  Email |Print

A fight for control of Libya’s $60bn sovereign wealth fund threatens to derail its multibillion dollar lawsuits against Goldman Sachs Group Inc and Societe Generale SA. Since the Libyan Investment Authority’s London law firm quit in April, two competing factions have claimed control, hiring separate lawyers and public relations firms.
There is a “state of chaos” in the litigation, lawyer Andrew Hunter told a London judge on Friday. He represents a potential witness in the Societe Generale case who says confidential files have been mishandled. “It hasn’t been possible to get consent from the LIA” over the documents, Hunter said, “because there is no one at the LIA to get consent from.”……………………………………….Full Article: Source

Why Long-Term Investing Can Be Dangerous

Posted on 22 May 2015 by VRS  |  Email |Print

Personally, I agree that, in general, large sovereign funds and pensions should invest for the long-term. There are scores of reasons why and thousands of papers produced by asset managers, think tanks and professors who believe so. Nearly every institutional investor with over US$ 100 billion in assets subscribes to the “long-term investor” philosophy.
Will the Canary Wharf deal be a positive in the long-run for the Qatar Investment Authority (QIA) given the price paid and resources allocated? Incorrect expectations based on a shaky premise can lead to money being stuck in an underperforming asset (this is especially the case with sizable illiquid investments)………………………………………..Full Article: Source

Global state investors shift into property

Posted on 21 May 2015 by VRS  |  Email |Print

Big public sector investors are joining the global property boom with plans to shift significant funds into real estate and infrastructure projects over the next three to five years to boost returns. Central bankers’ forum Omfif surveyed 500 public sector institutions with total assets of $29.7tn, which already hold 9.1 per cent in real estate and infrastructure.
The drive into real estate and infrastructure has been led by sovereign wealth funds, such as Norway’s oil fund, and public pension funds. Among other trends identified by the report was the rise of the Asia-Pacific region as the world’s sovereign wealth fund hub when measured by assets under management. Globally, sovereign funds’ assets grew 5.2 per cent in 2014………………………………………..Full Article: Source

With oil cheap, public pressure grows on Gulf sovereign funds

Posted on 21 May 2015 by VRS  |  Email |Print

Running sovereign wealth funds in the Gulf has become an awkward business in the era of cheap oil, as their managers face growing pressure from politicians and the public to prove they’re investing national reserves wisely.
When oil prices were high, the Gulf funds - which include some of the largest in the world - came under little public scrutiny. Government coffers were awash with energy revenues and the financial futures of the Gulf Arab states seemed secure. But with Brent crude now at little more than half last June’s level, the countries may be entering their toughest fiscal times since the 1990s, and this has changed the political climate………………………………………..Full Article: Source

Negative Rates in Europe, Shifted Sovereign Fund Behavior

Posted on 21 May 2015 by VRS  |  Email |Print

Asian and Middle Eastern sovereign wealth funds and large pension investors have been awarding a slurry of mandates to opportunistic credit managers. For example, in May, the £4.8 billion London Pensions Fund Authority hired Apollo Global Management for a £150 million allocation to target distressed debt, real estate debt, leveraged senior loans and private lending in developed markets.
hina Investment Corporation (CIC) recently moved forward on a deal to invest in WLR Cardinal Mezzanine Fund, a €350 million debt fund, co-managed by private equity firm WL Ross & Co. and Dublin-based Cardinal Capital Group. These public institutional investors have been trying to decrease any unnecessary long-term exposure to the European sovereign debt market………………………………………..Full Article: Source

The sustainable side of oil

Posted on 15 May 2015 by VRS  |  Email |Print

While an abundance of natural resources can handicap an economy, oil-based sovereign wealth funds can turn a finite resource into a sustainable financial tool. “Having large reserves of oil and gas presents an economy with considerable opportunities over the short- and long-term”, read a government-sponsored proposal for a Scottish oil fund. This was a statement that came in the lead-up to last year’s in/out referendum and one that saw the Scottish Government roll out plans to establish two oil funds and make good on any surplus tax receipts derived from North Sea oil and gas.
The first of the two funds would offset any sudden price swings and stabilise what could otherwise prove a potentially volatile revenue stream, according to the Fiscal Commission Working Group. This stabilisation fund, “into which higher than forecast oil and gas revenues are deposited, would minimise North Sea revenue volatility from changes in oil prices”, according to the Scottish Government Finance Secretary John Swinney………………………………..Full Article: Source

Sovereign wealth funds step up their property investments in Asia-Pacific

Posted on 13 May 2015 by VRS  |  Email |Print

Sovereign wealth funds are stepping up their property investments to diversify their focus from listed equity assets. Even though mainland China is an important market for the sovereign funds, they often still prefer developed markets for long-term returns.
“Obviously China is an important market for sovereign wealth funds but many of them, particularly the new entries to this region, would prefer more mature markets like Japan and Australia,” said Ada Choi, senior director at CBRE Research, Asia Pacific. “Hong Kong and Singapore are in the spotlight too but I think that activity will be driven by opportunities to access such prime properties,” said Choi………………………………………..Full Article: Source

Sovereign Wealth Funds Venture into New Territory

Posted on 12 May 2015 by VRS  |  Email |Print

Historically, government bonds have been an asset allocation staple of sovereign wealth funds. Central bank monetary policy is making a significant impact on sovereign debt markets. In the euro zone alone, 26 percent of European government bonds and 54 percent of German Bunds are trading on a negative yield. These unprecedented low yields have pushed SWFs to reassess their weightings and readjust their portfolios.
There has been a global proliferation of SWFs. Roughly half of the funds came into being during the past eight years; three quarters have been in existence since 2000. A further 22 jurisdictions are considering launching their own SWFs………………………………………..Full Article: Source

Sovereign wealth funds increase appetite for longer term investments

Posted on 12 May 2015 by VRS  |  Email |Print

Historically government fixed income has been an asset allocation staple of sovereign wealth funds (SWF). However, these unprecedented, low bond yields have pushed them to reassess their weightings and readjust their portfolios.Patrick Thomson, global head of Sovereigns, JP Morgan Asset Management, looks at the changing asset preferences of SWFs.
Central bank monetary policy across the globe is significantly impacting markets around the world. In the Eurozone alone, more than a quarter (26%) of European government bonds are trading on a negative yield, over half (54%) of Germany Bunds are trading on a negative yield – with some 23% yielding less than the -20 basis points threshold for European Central Bank (ECB) bond buying eligibility……………………………………….Full Article: Source

SWFs, Reshuffling Boards and Adding Overseas Offices

Posted on 07 May 2015 by VRS  |  Email |Print

International Petroleum Investment Corp. (IPIC) acted swiftly to shake off concerns about its corporate governance. The government-backed vehicle reshuffled its board on April 22, with U.A.E. Minister of Energy Suhail Mohammed Faraj al-Mazrouei replacing Khadem al-Qubaisi as the fund’s chief executive. Sheikh Mansour bin Zayed al-Nahyan remains as chairman of IPIC. Former IPIC CEO al-Qubaisi was also omitted from a list of new board members at Dubai-based construction firm Arabtec Holdings — in which IPIC now holds a 36.1 percent stake - and where he had served as chairman.
On April 13, the Financial Times reported allegations that al-Qubaisi used Luxembourg-based shell companies to secure deals with some of IPIC’s holdings. Specifically, the story alleged that he used one of the companies to take out a lease on Spain’s tallest building, Madrid’s Torre Foster and nine months later to sublet it to IPIC-owned Compania Espanola de Petroaleos (CEPSA), of which al-Qubaisi was chairman………………………………………..Full Article: Source

Malaysia’s Khazanah Is Spreading Its Reach Abroad

Posted on 06 May 2015 by VRS  |  Email |Print

The $45 billion sovereign wealth fund, headed by Azman Mokhtar, is stepping up its portfolio investments in Asia and beyond, and helping Malaysia’s major companies go international. Being an Asian sovereign wealth fund with cash to spare has its benefits. Just ask Azman bin-Haji Mokhtar.
A little more than two years ago, Azman, head of Malaysia’s Khazanah Nasional, heard from the fund’s analysts in China that e-commerce giant Alibaba Group Holding was looking for cornerstone investors to put the company on the path to an initial public offering. He didn’t hesitate: Khazanah invested a total of $400 million in two fundraising exercises, for a stake of 0.6 percent in the Chinese company. It participated alongside Temasek Holdings, the sovereign wealth fund of neighboring Singapore………………………………………..Full Article: Source

5 Key Takeaways at SWFI’s Institute Fund Summit Asia in Seoul

Posted on 05 May 2015 by VRS  |  Email |Print

In late April, the Sovereign Wealth Fund Institute (SWFI) held its third Asia summit this time in Seoul, Korea - a vibrant metropolis home to global companies such as Samsung, Hyundai and Lotte. South Korea’s rise to an economic powerhouse is fascinating. In 1957, South Korea and Ghana had nearly the same annual per capital global domestic product. Today, their stories couldn’t be more different.
Walking down the busy streets of Seoul and districts such as the glitzy Gangnam section, Korea has become a model for emerging economies in general, and Asian economies specifically. With prosperity in exports and domestic consumption, Asian companies are expanding market share. Eric Moffett who manages money at T. Rowe Price made the case that Asian companies and their earnings are exposed to rising incomes in parts of Asia………………………………………..Full Article: Source

Biggest Wealth Fund Joins Bond Bears in Bet Europe Rally Fading

Posted on 30 April 2015 by VRS  |  Email |Print

Norway’s $900 billion sovereign wealth fund is joining Janus Capital’s Bill Gross and Jeffrey Gundlach of Doubleline Capital in betting Europe’s historic bond rally is coming to an end.
Yngve Slyngstad, the manager of the Oslo-based fund which on Wednesday reported a record investment return, said he is weighting a 2.5 trillion-krone ($328 billion) bond portfolio to shorter maturities, meaning it will outperform when rates rise. “As long as interest rates are stable, or falling, we will be lagging the broader markets as we have a shorter maturity in the portfolio,” Slyngstad said in an interview………………………………………..Full Article: Source

SWFs Continue Global Hunt for Properties of Varied Stripes

Posted on 29 April 2015 by VRS  |  Email |Print

Sovereign wealth and public pension funds grabbed a series of headlines in 2014 as they bought up expensive properties in developed markets. Prime office properties in so-called gateway cities like London, New York and Paris attracted the lion’s share of sovereign funds’ capital, accounting for $13.8 billion of the $23 billion they spent on global real estate, according to Sovereign Wealth Center data. Of the major business centers, funds favored London, which received $4 billion in investments in 2014.
In the U.S., however, sovereign funds looked beyond New York, the traditional favorite, and targeted other major cities including Boston, Los Angeles, San Francisco and Washington, D.C. In the U.S. capital alone sovereign wealth funds bought four office buildings for a total of $733 million………………………………………..Full Article: Source

QIA Hunts for Hotels

Posted on 28 April 2015 by VRS  |  Email |Print

The Qatar Investment Authority made progress on two big London real estate deals this week. Elsewhere, Singapore’s state-owned asset managers continue to target India and Norway made a big investment in U.S. logistics properties.
It’s been a busy month for the Qatar Investment Authority (QIA). Sovereign Wealth Center research suggests that the fund spent some $2.3 billion on shares in Royal Dutch Shell and BG Group following their merger on April 8. Now QIA has turned to augmenting its real estate portfolio………………………………………..Full Article: Source

Norway’s SWF flexes its muscles

Posted on 23 April 2015 by VRS  |  Email |Print

Norway’s $890bn fund is flexing its muscles in corporate governance matters by revealing it will vote against US power company AES over proxy access. It marks only the second time that the world’s largest sovereign wealth fund has revealed its voting intention ahead of a company’s annual meeting, a tactic that the Norwegian investor is hoping to use more and more in the future writes the FT’s Richard Milne in Oslo.
Proxy access – the ability of minority shareholders to nominate their own board directors – is one of the fund’s main focus areas. It agreed to back two shareholder proposals on proxy access at AES and vote against two management proposals in its voting intention published on Tuesday, two days before the US company’s annual meeting……………………………………..Full Article: Source

Can Sovereign Wealth Funds Learn to Zig When Markets Zag?

Posted on 22 April 2015 by VRS  |  Email |Print

Sovereign Wealth Center’s transaction database (which excludes NBIM’s open-market stock trades that are part of its indexed strategies) backs Meert up. Sovereign wealth funds could be far better at investing countercyclically. An analysis of our investment data from 2005 to the first quarter of 2015 shows that there is a strong correlation between upward swings in the market cycle and sovereign funds’ increased willingness to take on risk — and vice versa.
This trend suggests that although these funds are supposed to invest for the long term and theoretically be indifferent to cyclical market movements. Instead, they tend to follow trends like other investors — piling in as markets rise and selling when they tumble. That’s a surefire recipe for underperformance…………………………………..Full Article: Source

Down Under, SWFs Compete for Hard Assets Amid Rising Prices

Posted on 16 April 2015 by VRS  |  Email |Print

Across Australia, sovereign wealth funds are buying up real estate and infrastructure, hoping to profit from favorable long-term demographic trends. But as prices rise and competition heats up, is the window of opportunity closing? On March 27, voters in New South Wales, Australia, returned right-wing Liberal politician Mike Baird to power as state premier at the head of a coalition government with the countryside-focused National Party.
Baird’s watchword throughout a bruising election campaign was “poles and wires” — he pledged to privatize the state’s electricity grid to raise money for an ambitious spending program to improve roads, schools and hospitals. As the opposition Australian Labor Party was against privatization, the election was considered a referendum on the sell-off — and the voters answered with a resounding yes………………………………………..Full Article: Source

How Sovereign Wealth Funds Can Benefit From Changing Global Trends

Posted on 15 April 2015 by VRS  |  Email |Print

Size, investment horizons, and few liabilities make sovereign wealth funds a unique investor class. In a low-yielding environment, such characteristics mean those funds have discreet advantages. Institutional investors face a new landscape — one shaped by zero-interest-rate policies of many central banks, quantitative easing and low growth. Sovereign wealth funds face the same issues as many other asset owners as they struggle to generate meaningful returns under such conditions.
Sovereign wealth funds differ from other kinds of institutions. State-owned funds typically have a multi-generational investment horizon and do not require an immediate yield as they tend to have strong cash inflows in normal economic circumstances………………………………………..Full Article: Source

Barclays Sees Extension of ‘Blow-Out’ Quarter in Mideast

Posted on 14 April 2015 by VRS  |  Email |Print

Barclays Plc sees local firms and sovereign wealth funds driving Middle East deals after advising on about $15 billion of equity and M&A transactions in the first quarter.
“M&A will continue to be active and there’ll be some interesting outbound deals,” Makram Azar, chairman for the bank in the Middle East and North Africa, said in a telephone interview. “Unlike in the past, sovereign wealth funds from the region will look at more return-generating assets such as for example infrastructure, favoring annual cash returns.”……………………………………….Full Article: Source

Much more sovereign wealth could be headed to NYC real estate

Posted on 13 April 2015 by VRS  |  Email |Print

Sovereign wealth funds made quite a splash in Manhattan real estate in 2014, with north of $2 billion in deals. But that may only be the beginning. A growing number of government funds are looking to increase their investments in real estate worldwide, according to new data by research firm Preqin exclusively reviewed by The Real Deal.
Combined with a marked growth in their balance sheets — since October 2013, sovereign wealth funds have increased their total assets from $5.38 trillion to $6.31 trillion — and New York’s attractiveness as an investment destination, this could mean more money is heading to the Big Apple………………………………………..Full Article: Source

Why Sovereign Wealth Funds Should Not Invest at Home

Posted on 10 April 2015 by VRS  |  Email |Print

A SWF is a type of extra-budgetary fund that operates outside the annual government budget process. SWFs have traditionally been created for a macroeconomic objective (e.g., fiscal stabilization), or to save for future generations. All invest at least partly in foreign assets.
While the idea of using a SWF to invest in domestic assets may resonate with government officials and politicians, there are strong arguments against using SWFs for this purpose. A fund with multiple objectives can undermine public financial management systems, and lead to poor investment decisions, patronage and even corruption………………………………………..Full Article: Source

Do sovereign wealth funds make sense for Africa?

Posted on 09 April 2015 by VRS  |  Email |Print

Sovereign wealth funds seem to be the new must-have accessory for African governments—especially those with freshly discovered oil and gas reserves. In the past three years Angola, Ghana and Nigeria have all set up funds. A string of other countries including Kenya, Liberia, Mozambique and Tanzania are planning to follow suit. But are these funds delivering? And do they make sense in an African context?
These days, everyone wants a sovereign wealth fund (SWF). “The label sovereign wealth fund sounds sexy. ‘Norway has one, Chile has one, Qatar has one, we want one too,’ is what we are hearing a lot” from African leaders, said Andrew Bauer, an economic analyst at the Natural Resource Governance Institute (NRGI), a New York-based NGO………………………………………..Full Article: Source

Are Sovereign Wealth Funds Becoming Guarantors?

Posted on 08 April 2015 by VRS  |  Email |Print

Although sovereign wealth funds only became a major global financial factor 25 years ago, they are rapidly becoming the centerpiece of world monetary liquidity, utilized by 15 global governments fortunate enough to have accumulated excess cash, after meeting all budgetary monetary requirements. It’s estimated that these government-directed wealth centers comprise $7 trillion of the world’s total excess monetary capability of $28 trillion.
Still a leading factor, with close to a trillion dollars in reserve, Norway made this government-directed super-investment vehicle famous as a stockpile for that diminutive (5 million population) Scandinavian nation’s proceeds from North Sea oil and gas………………………………………..Full Article: Source

Is Africa the New Frontier of Sovereign Wealth Funds?

Posted on 07 April 2015 by VRS  |  Email |Print

With oil prices accelerating past $100 per barrel, history suggested that we were on the verge of another boom in sovereign wealth fund creation like the one that characterized the mid-2000s. Now, in 2015, that vision has failed to materialize. Sovereign Wealth Center’s Victoria Barbary suggests that this might not be such a bad thing.
It’s a snowy morning in Helsinki at the end of March. Even the native Finns are wrapped up in goose-down coats to keep out the chill as they walk to work. A coat of white covers the city in a picturesque blanket that dampens the noise of the rush-hour traffic. This isn’t the place you’d expect to find parliamentary delegations from resource-rich countries of sub-Saharan Africa and Central Asia, but walking down the street to the new Finnish parliament annex is a group of African MPs decked out in scarves and hats in the bright colors of their countries’ flags, standing out against the white and gray of their surroundings………………………………………..Full Article: Source

Sovereign wealth funds exerting an ever greater influence

Posted on 01 April 2015 by VRS  |  Email |Print

The collapse in crude oil prices over the past six months has put many countries under fiscal pressure. But some oil-rich producers, such as Norway, the UAE and Kuwait, are in a more comfortable position thanks to longstanding commitments to ring-fence oil revenues into funds to preserve the value of their hydrocarbon resources.
The term ‘sovereign wealth fund’ has only existed for a decade or so, but state vehicles seeking to provide for future generations have been investing for decades, with Kuwait’s fund going back to 1953. The work of these organisations has been pioneering in building and using wealth. “Oil is sold and turned into a financial asset — the idea is to preserve the value of that money in line with inflation, plus some extra,” says Victoria Barbary, director of Institutional Investor’s Sovereign Wealth Centre, a research service………………………………………..Full Article: Source

CIC needs to open up about its past slip-ups

Posted on 01 April 2015 by VRS  |  Email |Print

China’s sovereign wealth fund will be investing more of its resources overseas, the fund’s top executive said Friday at the Boao Forum for Asia. In January, China Investment Corp (CIC) established a subsidiary called CIC Capital for the purpose of making direct investments overseas, said CIC chairman Ding Xuedong. The CIC’s moves usually get a lot of attention due to the company’s relationship with the government.
Founded in September 2007, CIC is a State-owned enterprise responsible for managing part of China’s foreign exchange reserves. Its purpose is to help the government diversify its assets and obtain better returns on China’s growing stash of foreign exchange reserves, which reportedly reached $3.8 trillion in 2013, the most in the world. Prior to setting up the CIC, China had most of its foreign exchange reserves in low-yielding US treasury bonds………………………………………..Full Article: Source

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