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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

GIC among investors bidding for German group Tank & Rast in $4.11b deal

Posted on 31 March 2015 by VRS  |  Email |Print

German motorway service station group Taoutnk & Rast (Tank & Rast), which has been up for grabs for three months now, has attracted several investor groups including Singapore’s GIC to bid in a deal worth up to 3.5 billion euros ($4.11 billion).
Reuters found out through sources that the investors were preparing to bid for the group, which British buyout group Terra Firma Capital Partners put up for sale in January this year. Tank & Rast could appeal to pension funds and insurers who are focusing on infrastructure investments to generate better returns than from government bonds, the sources said………………………………………..Full Article: Source

Swiss banking model is ‘dead’, says Abu Dhabi finance chief

Posted on 31 March 2015 by VRS  |  Email |Print

Abu Dhabi intends to set itself up as a new hub for wealth management, with the head of its nascent international financial centre declaring Switzerland’s old model of private bank secrecy to be “dead”.
Abu Dhabi Global Markets is an expression of world ambition, intended to elevate the oil-and-gas-rich emirate to the tables of the most influential global institutions, such as the Basel Committee on Banking Supervision and the Group of 20 Nations, using Singapore rather than Switzerland as its model, its chairman told the Financial Times………………………………………..Full Article: Source

China’s CIC to boost foreign direct investment

Posted on 30 March 2015 by VRS  |  Email |Print

China’s giant sovereign wealth fund is stepping up direct investments in long-term global assets, focusing particularly on the US in a vote of confidence in the recovery in the world’s largest economy. Ding Xuedong, chairman of China Investment Corporation, which has about $US220 billion ($284bn) in overseas assets, said he saw diverging economic growth in coming years, with a resurgent US leading the way.
“The US is recovering faster than many have expected, which would make it the No. 1 engine of growth for the global economy,” Mr Ding said on the sidelines of the Boao Forum, an annual gathering of world political and business leaders in the southern Chinese island of Hainan………………………………………..Full Article: Source

In Africa, SWFs Seek to Bridge Infrastructure Gap — And Make Money Too

Posted on 26 March 2015 by VRS  |  Email |Print

Across sub-Saharan Africa, sovereign wealth funds are stepping in to provide capital for big infrastructure projects. There are major risks — but the profits could be huge. The town of Bagamoyo, on Tanzania’s sun-drenched Indian Ocean coast, is a quiet seaport with a history of maritime trade. But it could be about to get a lot busier.
The Tanzanian government has signed an $11 billion deal to transform this historic harbor into Africa’s biggest port. Bagamoyo will become a “special economic zone,” shipping oil, gas and food products from East Africa to emerging economies in the Middle East, Asia and beyond. To secure funding for the project, the Tanzanian government brought in a pair of big foreign investors: Hong Kong-based infrastructure conglomerate China Merchants Holdings International Co. and a sovereign wealth fund, the $34.4 billion State General Reserve Fund of the Sultanate of Oman(SGRF)………………………………………..Full Article: Source

CIC Makes Strategic Investment in Uranium Mining Company

Posted on 25 March 2015 by VRS  |  Email |Print

Currently, China has 27 nuclear reactors under construction. The Asian giant’s nuclear programme possessed 18 GW of nuclear energy capacity in 2014, determined to hit 58 GW by 2020. The demand from China, India and the Middle East are elevating uranium prices, catching up to pre-Fukushima levels.
Perth-based Paladin Energy Ltd, a Uranium explorer and mining company, has agreed to issue US$ 50 million in senior, unsecured convertible bonds to Leader Investment Corporation, a sovereign wealth enterprise (SWE) of the China Investment Corporation (CIC). These convertible bonds issued to the sovereign wealth fund are on the same terms and conditions from the last US$ 100 million convertible bonds that were issued to clients of JP Morgan………………………………………..Full Article: Source

GIC chief laments investors’ short-term perspective

Posted on 23 March 2015 by VRS  |  Email |Print

Asset owners could work together to forge a greater focus on long-term investments, according to the CIO for the Government of Singapore Investment Corporation (GIC). In a new research paper, the sovereign wealth fund’s chief investment officer said he was keen for long-term partnerships with external managers.
However, he expressed concern that other investors’ time horizon did not match GIC’s. Lim Chow Kiat, group CIO for GIC, said that the sovereign investor was limited in the number of truly long-term investments it can make by other investors’ and external managers short-term horizons………………………………………..Full Article: Source

Abu Dhabi’s Invest AD Shifts Funds to Egypt as Stability Returns

Posted on 23 March 2015 by VRS  |  Email |Print

Abu Dhabi asset manager Invest AD, part of Abu Dhabi Investment Council, said it’s boosting investments in Egypt on expectation that the country’s renewed political stability and economic reform will help drive growth. The North African country now accounts for 35 percent of Invest AD’s $50 million Africa equity fund, up from 10 to 15 percent last year, portfolio manager Sherif Salem said in an interview. Nigeria is 5 percent, down from 30 to 35 percent.
“The market is already factoring in quite a positive outcome,” Salem said Sunday in Abu Dhabi. “The trigger was political stability. From an economic standpoint, it’s been reassuring in the past six to eight months, the implementation of economic policies and investments that have been promised.”……………………………………….Full Article: Source

Minerals-Backed SWFs Show Their Mettle as Coal, Copper Prices Plummet

Posted on 20 March 2015 by VRS  |  Email |Print

State-owned investors funded by mineral and metals mining revenue are suffering as prices fall. Fiscal prudence may see them through. As petroleum prices tumble, the world’s attention is focused on those sovereign wealth funds associated with hydrocarbons.
People are paying less heed to government-owned asset pools funded by revenue from nonoil commodities, such as metals, coal and diamonds. Prices for many of these exports have also declined over the past year, though less sharply than oil. Copper prices have fallen by 18 percent since crude started to tank last July, to their lowest value since mid-2009, according to NASDAQ data. Thermal coal has dropped 13 percent over the same period, and is also hovering near six-year lows, according to data provider InvestmentMine………………………………………..Full Article: Source

An answer to Fund-Bank domination

Posted on 19 March 2015 by VRS  |  Email |Print

The Asian Infrastructure Bank is gaining support with European countries signing up. Not surprisingly, US is sulking. Is the tide turning on the Asian Infrastructure Investment Bank, the new development bank being pushed by China to help plug Asia’s multi-trillion-dollar infrastructure financing deficit?
Besides, the signs are that nothing but the highest standards are planned for the bank. For instance the person expected to be in charge, Jin Liqun, is the former chair of the board of supervisors of China Investment Corporation, the Chinese sovereign wealth fund with $200 billion of registered capital, and chair of the International Forum of Sovereign Wealth Funds. He’s also a former vice president of the Asian Development Bank………………………………………..Full Article: Source

Norway fund turns green, exits coal stocks

Posted on 17 March 2015 by VRS  |  Email |Print

The $850-billion Norwegian Government Pension Fund, the world’s largest sovereign wealth fund, has sold off almost all of its holdings of Indian coal and power stocks such as Coal India, Adani Power, GVK Infra and NTPC, Lanco Infratech, CESC and Monnet Ispat, among others, during 2014, citing risks posed to climate, according to the list of sovereign fund’s holdings available with dna said.
The massive fund, which is minority shareholder in more than 9,000 companies across the globe, however has curiously made investment in Reliance Power during the year. The sell-off has not been restricted to India alone as investments in global energy majors, 16 from the US including Alpha Natural Resources, Arch Coal, Consol Energy and Peabody, five Australian coal companies like Coal of Africa, Coalspur Mines and Whitehaven Coal, and also Exxaro of South Africa have been sold off……………………………………….Full Article: Source

Norway Wealth Fund Gains $67 Billion on Emerging Market Bet

Posted on 16 March 2015 by VRS  |  Email |Print

Norway’s sovereign wealth fund rose 544 billion kroner ($67 billion) last year as it broadened its holdings to capture more growth in emerging and frontier markets. The Government Pension Fund Global returned 7.6 percent in 2014, its smallest gain since 2011, the Oslo-based investor said on Friday. The $860 billion fund’s stocks rose 7.9 percent and its bonds advanced 6.9 percent. Real estate investments increased 10.4 percent.
The fund, the world’s biggest, has warned it expects diminished returns amid record low, and even negative, yields in key government bond markets combined with slow growth in developed markets. The fund boosted its holdings in emerging markets to 10.6 percent, adding countries such as Ghana and Mauritius. It also invested in Nigeria’s currency for the first time………………………………………..Full Article: Source

China’s CIC Shifts Wealth Fund Focus to Emerging Markets

Posted on 12 March 2015 by VRS  |  Email |Print

China’s $653 billion sovereign-wealth fund is looking to invest more in emerging markets, according to an infrastructure investing official at China Investment Corp. CIC, which has made several high profile investments in the U.S. and Europe in recent years, is targeting emerging countries where there is less competition, more opportunity to tap growth and a greater need for capital, the executive said.
The sovereign-wealth fund, whose past investments include stakes in London’s Heathrow Airport and New York-based private-equity firm Blackstone Group, plans to build new container ports in Kenya and Tanzania, Mi Tao, a director of infrastructure investing at CIC, said………………………………………..Full Article: Source

In European Infrastructure Boom, SWFs Navigate Minefields

Posted on 12 March 2015 by VRS  |  Email |Print

Across Europe, sovereign wealth funds are financing much-needed infrastructure projects — and realizing big profits. But shifting regulations pose risks. In Spain, a huge infrastructure deal is close to completion. New York investment bank Morgan Stanley has put its Madrid-based natural gas distribution company Madrilena Red de Gas on the market for around euro1.8 billion ($2 billion) — and demand is off the charts.
Three separate investor groups are reportedly battling for the assets, with two sovereign wealth funds in the fray: the Abu Dhabi Investment Authority (ADIA) and Gingko Tree Investment, a unit of China’s State Administration of Foreign Exchange (SAFE)………………………………………..Full Article: Source

Offshore investors spend record $7bn in office purchases

Posted on 12 March 2015 by VRS  |  Email |Print

Offshore investors spent a record $7 billion on Australian commercial office buildings last year, including Chinese companies buying more than $1bn of commercial property for the first time.
He said the fall in the Australian dollar had made real estate more attractive, as the report outlined an expectation of increased activity by Chinese investors, sovereign wealth funds and private equity firms. Chinese firms spent $6.7bn on offshore real estate last year, including $1bn of commercial office space in Australia………………………………………..Full Article: Source

Are Sovereign Wealth Funds Key to Global Economic Recovery?

Posted on 11 March 2015 by VRS  |  Email |Print

Sovereign wealth funds, a multiplicity of aggregate financial world investment groupings and investing opportunities comprise the huge amounts of excess monetary liquidity that have aggregated worldwide. While some are sponsored and/or backed by indigenous governments, they are primarily managed by financial experts, who constantly scan global tangible and intangible objectives, wherever they might exist.
While the U.S., the United Kingdom, and Germany have their large well-known investment institutions like Goldman-Sachs, the Carlyle Group, KKR, and Apollo Management, similar cash-rich nations have relied on these sophisticated sovereign wealth institutions to invest their share of the increasing liquidity that is coalescing in many developing, and even smaller developed world national entities………………………………………..Full Article: Source

Sovereign wealth funds bask in Japan’s rising sun

Posted on 11 March 2015 by VRS  |  Email |Print

Some of the world’s largest institutional investors and sovereign wealth funds are flocking to Japan. In the latest big deal, Chinese sovereign wealth fund China Investment Corporation (CIC) reportedly splashed out about ¥140bn ($1.18bn) on Tokyo’s Meguro Gajoen complex, bought from Mori Trust, in a joint venture with LaSalle Investment Management. Foreign capital pumped ¥1trn ($8.4bn) into Japan’s property market in 2014 – 29% up on the year and the highest level since 2008, according to Real Capital Analytics.
Tokyo has been the main focus of global capital targeting Japan. Buyers included Singapore sovereign wealth fund GIC, which paid $1.7bn for Pacific Century Place in the Marunouchi district of central Tokyo, and Blackstone, which bought a portfolio of apartments in Tokyo from GE Capital for $1.61bn………………………………………..Full Article: Source

China Investment Corporation Restructured Direct Investment Strategy

Posted on 09 March 2015 by VRS  |  Email |Print

For years, the China Investment Corporation (CIC) has accumulated a substantial pool of sovereign wealth capital, but encountered a series of hiccups on getting its direct investment program fully functioning. The Asian sovereign wealth fund placed significant bets in Canadian oil sands, infrastructure, utilities and U.S. financials.
At the start of 2015, CIC formed a unit called CIC Capital whose focus is to go after direct equity investments. When some initial direct investments exhibited tepid performance, it fostered some level of disillusionment with a number of CIC’s government higher ups. The CIC did not give up on direct investing, allocating capital to companies such as Teck Resources, Bumi Resources, Thames Water and Visa………………………………………..Full Article: Source

SWFs Double Down on Hotels

Posted on 09 March 2015 by VRS  |  Email |Print

Sovereign wealth funds’ investments in the hospitality sector have dominated the headlines this week. On Monday, the British press reported that the Abu Dhabi Investment Authority (ADIA) had offered an eye-watering GBP1.6 billion ($2.4 billion) for a trio of landmark London hotels — the Berkeley, Claridge’s and the Connaught — owned by the Maybourne Hotel Group.
At a reported GBP3 million per room, the offer would represent one of the highest per-key prices ever paid. But ADIA will face competition, with other Middle Eastern investors believed to have submitted rival bids. It’s not just British properties that are attracting interest from sovereign wealth funds. The Sovereign Wealth Center has observed a boom in the Japanese hospitality sector in 2015, and hotels in emerging markets are drawing capital from state investors too………………………………………..Full Article: Source

Russian state’s rainy day fund drops as finances squeezed

Posted on 04 March 2015 by VRS  |  Email |Print

The Russian government’s rainy-day fund has shrunk by almost 10 percent in dollar terms in February after the state sought to fill a hole in its budget, where revenues have suffered due to low oil prices. The Reserve Fund is used to support Russian public finances in time of low oil and gas prices and is held in dollars, euros and British pounds. It fell to $77.05 billion from $85.09 billion in January, the finance ministry said Tuesday. The fall in ruble terms was sharper, almost 20 percent, since the ruble gained ground against the dollar and other currencies last month.
The finance ministry said the government had used 500 billion rubles ($8 billion) from the fund to supplement a drop in budget revenue. That followed a separate withdrawal of 50.48 billion rubles in January. Russia’s other main sovereign fund, the National Wealth Fund, rose by $900 million in February to $74.92 billion, the ministry said Tuesday, although its value in ruble terms fell……………………………………….Full Article: Source

Fund cuts US investment in Europe push

Posted on 04 March 2015 by VRS  |  Email |Print

The Kuwait Investment Office (KIO), the London branch office of sovereign wealth fund Kuwait Investment Authority, is gradually reducing its overweight stance on US assets after keeping that position for seven years, its chief executive said.
Osama Al Ayoub, speaking at a business conference in Abu Dhabi, also said the KIO was going overweight on Europe because of the European Central Bank’s (ECB) decision in January to use quantitative easing, a radical form of monetary stimulus. ‘With all this liquidity Mr Draghi (ECB president) is trying to introduce, assets will inflate,’ he said……………………………………….Full Article: Source

How Temasek Has Driven Singapore’s Development

Posted on 04 March 2015 by VRS  |  Email |Print

Last year marked the 40th anniversary of Temasek, one of Singapore’s two sovereign investment funds (SIFs), along with the Government Investment Corporation (GIC). Set up in 1974 as part of the newly independent city-state’s nation- building effort, Temasek has evolved from a sleepy holding company shepherding an initial portfolio of 35 inherited government-linked companies (GLCs) to a long-term, return-seeking investor with both wealth-management and development mandates.
Temasek is still a government holding company that acts as a shareholder on behalf of the Singaporean government. Today it pursues its developmental mandate by buying direct stakes mostly in Singaporean and Asian companies, and then reinvesting its proceeds from asset sales and dividend income into foreign assets, acting like a private equity fund……………………………………….Full Article: Source

Temasek: Inclusion in NIR framework will not affect strategy or dividend policy

Posted on 03 March 2015 by VRS  |  Email |Print

The move to include the projected earnings of Temasek Holdings in the Net Investment Returns (NIR) framework will not impact the investment holding company’s strategy or dividend policy, a spokesperson for Temasek said. Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam announced the inclusion of Temasek’s total expected returns into the NIR framework in his Budget announcement on Feb 23, with the boost to Government coffers needed to bolster increased spending on areas including “critical infrastructure” such as healthcare and public transport.
On Tuesday (Mar 3), in a letter to TODAY’s Voices section, Mr Jeffrey Fang, Associate Director of Strategic and Public Affairs at Temasek, said: “The Net Investment Returns (NIR) framework does not affect Temasek’s approach to investment.”……………………………………….Full Article: Source

No change to Temasek investment strategy despite capital-gains inclusion

Posted on 03 March 2015 by VRS  |  Email |Print

Temasek Holdings said it will not change its strategy of seeking sustainable long-term investment returns, amid suggestions that it should hold more liquid assets and settle for lower returns now that its capital gains are to be included in the Government’s coffers.
Such suggestions for Temasek to take a more conservative investment stance emerged following Finance Minister Tharman Shanmugaratnam’s Budget speech last Monday that the Government is “now ready” to include the company’s total expected returns — including realised and unrealised capital gains — into the Net Investment Returns (NIR) framework………………………………………..Full Article: Source

Angolan sovereign wealth fund eyes hotel investments

Posted on 03 March 2015 by VRS  |  Email |Print

The Angolan sovereign wealth fund, Fundo Soberano de Angola (FSDEA), was officially launched in October 2012 with US$5bn in initial capital, and reportedly receives a $3.5bn injection a year from Angolan oil proceeds.
By the end of 2014, two years after its launch, the fund announced two key investments: $1.1bn in an infrastructure fund (focused on investments in energy, transport and large industrial developments) and $500m into a ‘hospitality’ development fund. Both are focused towards investments across the continent, as well as in Angola………………………………………..Full Article: Source

Temasek faces new normal as Singapore eyes funds

Posted on 02 March 2015 by VRS  |  Email |Print

Temasek Holdings’s long-term investing strategy will have to include more short-term and liquid assets after the Government opened up the option to draw more funds from the state-owned investment company.
Singapore’s Government is “now ready” to include part of Temasek’s capital gains in its annual budget as the country spends more on its subway network, airport, education and social security to support an ageing population, Finance Minister Tharman Shanmugaratnam said in his Budget Statement on Feb 23. ……………………………………….Full Article: Source

SWFs Eye New Private Equity Strategies

Posted on 02 March 2015 by VRS  |  Email |Print

Sovereign wealth funds are adopting new approaches to private equity investments, we learned this week. Guy Hands, founder of London-based Terra Firma, told Sovereign Wealth Center that state-owned investors are showing interest in the firm’s innovative new model; unusually, Terra Firma’s remuneration will derive almost entirely from performance, not myriad management and service fees. That’s proving attractive to sovereign funds, several of which have recently complained about the spiraling costs of private equity managers.
Sovereign Wealth Center understands that the Abu Dhabi Investment Council (ADIC) is one of the funds that is actively working alongside private equity managers, rather than passively investing in funds. ADIC may be the fund that is rumored to be partnering with London-based Coller Capital, a specialist investor in private equity’s secondary market, to help restructure Irving Place Capital Partners III, a $2.7 billion buyout fund raised in 2006 by Irving Place Capital Management of New York………………………………………..Full Article: Source

Sub-Saharan Africa’s sovereign wealth funds struggle in era of low oil

Posted on 26 February 2015 by VRS  |  Email |Print

For several years, now, Sub-Saharan Africa’s largest oil producing states have been working to create sovereign wealth funds (SWFs). But as oil prices and production decline, such funds may not be able to deliver the benefits they once promised. Since 2007 Angola, Ghana, Nigeria and Mauritania have joined Equatorial Guinea and Gabon in the club of oil-producing countries with SWFs. Currently, four of sub-Saharan Africa’s five largest oil producers maintain some sort of SWF.
Attracted, perhaps, by the success of similar funds in the Middle East and North Africa (MENA) region, sub-Saharan governments are looking to capture oil revenues in rainy day funds in order to smooth fiscal expenditures during suppressed commodity cycles………………………………………..Full Article: Source

Sovereign Wealth Fund Investments Hold Steady Amid Oil Shock

Posted on 25 February 2015 by VRS  |  Email |Print

Tired of having its economy whipsawed by big swings in oil prices, Norway in 1996 pened a rainy-day fund to save oil earnings for future generations and cushion the government’s budget from volatility in crude prices. Today the Government Pension Fund Global, as its called, is the world’s largest sovereign wealth fund, with $870 billion in assets.
Its massive size can easily offset the fiscal hit from the recent drop in global oil prices or help prevent “Dutch disease” - the tendency of natural-resource revenues to strengthen local currencies and weaken economic competitiveness- should oil prices rebound………………………………………..Full Article: Source

Sovereign Wealth Fund Direct Infrastructure Investments, 2013-2014

Posted on 25 February 2015 by VRS  |  Email |Print

Sovereign wealth funds surpassed US$ 7 trillion in assets before the end of 2014. These institutional investors typically have unique liabilities compared to public pensions. Many of the large sovereign wealth funds, funds with over US$ 30 billion in assets, seek long-term investments. When it comes to infrastructure, sovereign wealth funds pursue accommodating investment regimes, low political risk, assurances from government and opportunities to earn stable financial returns.
According to our research, Asia and Europe top the list as the largest recipients of direct infrastructure investment by sovereign wealth funds, followed by Australia and New Zealand. The Americas ranks dead last, even behind Africa. Breaking apart the Americas, South America has few large direct infrastructure investments by sovereign funds, the bulk going to North America………………………………………..Full Article: Source

Sovereign Wealth Funds Investing at Home – Opportunity Fraught with Risk

Posted on 24 February 2015 by VRS  |  Email |Print

Following the recent discoveries of large oil and gas deposits in East Africa, a number of countries in the region are in the process of establishing, or are discussing the creation of, sovereign wealth funds (SWFs) as a means to stabilise the effect of volatile currency inflows and to save for future generations.
Additionally, like several other SWFs established over the last decade, some East African governments are considering a role for the planned funds in economic development, as strategic investors in the national economy. The use of SWFs as a tool for strategic domestic investments opens up a range of new possibilities for deepening undercapitalised domestic financial markets and crowding in private capital to infrastructure in priority sectors such as power and transport………………………………………..Full Article: Source

Sovereign Wealth and Pension Money Flow Into Energy Funds

Posted on 24 February 2015 by VRS  |  Email |Print

Private equity firms are still raising institutional investor capital to target investments in the U.S. energy sector. The Blackstone Group had total commitments of US$ 4.5 billion for its second energy fund, Blackstone Energy Partners II. Some large pensions invested in the fund include: New Jersey Division of Investment and Teacher Retirement System of Texas (TRS).
Meanwhile, smaller funds and platforms are raising capital. Dallas-based PetroCap raised US$ 350 million in PetroCap Partners II, a fund focusing on oil & gas investments in the US$ 20 million to US$ 70 million range. On the debt side, EIG Global Energy Partners and Winter Park-based Triloma Financial Group have formed Triloma EIG Global Energy Fund, an unlisted investment company that will allocate capital to privately originated energy company and project debt………………………………………..Full Article: Source

Manat öldu: Devaluation in favour of Oil Fund

Posted on 24 February 2015 by VRS  |  Email |Print

Devaluation of manat on February 21 has identified the only player who won as a result of the Central Bank’s decision: the State Oil Fund of Azerbaijan (SOFAZ). In spite of foreign estimates manat devaluation didn’t cause total panic in Baku. In general, people treated this situation from philosophical point of view and even tried to joke. Thus, for example, today a man and his wife exchanged the following words while admiring fresh frosty air in the morning: “Nə “клёво”? Manat öldu” (What’s good in it? Manat has died).
Manat has died. It can rise from dead but there’s a direct beneficiary of its death. Such beneficiary is SOFAZ, which receives revenue in US dollars and transfers manats to the state budget………………………………………..Full Article: Source

Azerbaijan’s Devaluation in Disguise

Posted on 18 February 2015 by VRS  |  Email |Print

Though Azerbaijan is not as tied to the Russian economy, it still is facing difficulties driven by the drop in oil prices. Government finances are based on a $90 a barrel price of oil while currently it is a fraction of that. Thus one of the moves is to tap the $37 billion oil fund – State Oil Fund of the Azerbaijani Republic (SOFAZ).
While some of the investment that will proceed is for prestige projects including that of the May 2015 European Games, much of it will be spent on infrastructure that should in the long-term boost the economic potential of Azerbaijan………………………………………..Full Article: Source

Ottawa Should Look To Norway To Overcome Oil Woes: Reports

Posted on 13 February 2015 by VRS  |  Email |Print

Greg Poelzer of the Macdonald-Laurier Institute released a report Thursday arguing that the creation of so-called “sovereign wealth funds” would take money out of the hands of politicians interested in spending in the short-term and instead place it into long-term investments.
The funds are government-owned and managed, but kept separate from other reserves. They would keep generating returns on investment even after a non-renewable resources dries up.Alberta is not contributing to a decades-old fund and B.C. is the only other province to float the idea of a fund. The federal government has also dismissed creation of a sovereign wealth fund. The idea of a sovereign wealth fund — the type that has made every Norwegian a theoretical millionaire — has received renewed interest in the past few months as Canadians take in the economic damage caused by a huge slide in the price of oil………………………………………..Full Article: Source

Middle Eastern sovereign wealth money still flowing, despite oil woes

Posted on 12 February 2015 by VRS  |  Email |Print

The Carlyle Group’s David Rubenstein says that Middle Eastern sovereign wealth funds are making larger investments than ever before. Co-CEO David Rubenstein said during an analyst call that there has been a marked increase in commitments from sovereign wealth funds, including from Middle Eastern governments that are under fiscal pressure due to falling oil prices. Same goes for commitments from many Asian sovereign wealth funds that are facing domestic economic headwinds.
“The large sovereign wealth funds are now coming into the market… and making very very large commitments, larger than we’ve ever seen before” he said. “And I don’t think there is likely to be a diminution in that trend this year despite the fact that you may say, for example, “In the Middle East, because oil prices are down, won’t the sovereign wealth funds there be pulling back?’……………………………………….Full Article: Source

How Hedge Funds Can Access Sovereign Wealth Funds

Posted on 12 February 2015 by VRS  |  Email |Print

As U.S. pensions such as California Public Employees’ Retirement System which pulled out of hedge funds in 2014, and New Mexico Public Employees’ Retirement Association which lowered its hedge fund allocation from 7% to 4%, sovereign wealth funds are becoming a larger target market for hedge funds. There is a segment of sovereign wealth funds that allocate to hedge funds to achieve specific investment goals.
For example, the Korea Investment Corporation (KIC) is a sovereign wealth fund that invests in hedge funds. One of KIC’s former chief investment officers Scott Kalb possessed a strong hedge fund background. Some other sovereign funds that commit capital to hedge funds include, but not limited: Abu Dhabi Investment Authority (ADIA), Australia’s Future Fund, Alaska Permanent Fund and Temasek Holdings………………………………………..Full Article: Source

Oilman becomes milkman as Norway’s best jobs disappear

Posted on 11 February 2015 by VRS  |  Email |Print

Norway’s oil industry, so rich it spawned the world’s largest sovereign wealth fund, is struggling as oil prices plunge. When Joergen Langaunet started as a project planner at offshore engineer Aker Solutions ASA in 2012, he worked a lot of overtime.
Norway’s oil industry, so rich it spawned the world’s largest sovereign wealth fund, was booming. Then last year, he realised he was spending most of his time in the lunch room: His services weren’t needed. In September, as crude prices were on their way to the biggest plunge since 2008, Langaunet lost his job. Today he’s a regional manager for Tine SA, Norway’s biggest dairy producer………………………………………..Full Article: Source

Fossil Fuel Divestment: Smart Bet or Losing Strategy?

Posted on 11 February 2015 by VRS  |  Email |Print

Just last week, Norway announced that its sovereign wealth fund — an $850 billion pension reserve that was built on the Scandinavian nation’s oil and gas resources — had jettisoned more than 49 companies, many involved in coal and unconventional oil extraction, from its portfolio in 2014.
The reason: “Uncertainty about the sustainability of their business model.” To be sure, Norway is still investing heavily in fossil fuels. But the move nonetheless adds to the more than $50 billion that proponents of divestment say has been pulled out of the fossil fuel sector by both institutional and individual investors since the movement was launched by climate activists in 2012………………………………………..Full Article: Source

UAE aims for energy diversification, bets SWF

Posted on 11 February 2015 by VRS  |  Email |Print

General Shaikh Mohammad Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces,said: “With the leadership of Khalifa, we established the Abu Dhabi Investment Authority (ADIA) in the ’70s, which today is considered the second-biggest sovereign investment fund in the world.
“We have also started working on establishing a plant for clean nuclear energy; 25 per cent of the country’s needs will be dependent on this clean nuclear energy once we build the first nuclear plant in 2017.” He acknowledged Ahmad Khalifa Al Suwaidi and Mohammad Habroush for their role in the founding of ADIA. Shaikh Mohammad said the country has also started advancing in the manufacturing industry. “Srata Manufacturing in Abu Dhabi manufactures parts of Boeing and Airbus planes. If that is not impressive enough, 83 per cent of the workforce are women,” he added………………………………………..Full Article: Source

Why are SWF’s shy of African investments?

Posted on 04 February 2015 by VRS  |  Email |Print

Sovereign Wealth Funds (SWFs) could easily resolve Africa’s infrastructure funding issues, or go a long way toward doing so. So why are they so hesitant toward investments in Africa and what are the chances for change?
There is no lack in money. SWFs are keen to diversify into real assets with long-term growth prospects – ample opportunities for which exist in many parts of Africa. Indeed, if SWFs – large state owned investment funds – were to steer a mere 1.3 per cent to 1.5 per cent of their total assets into sub-Saharan Africa, they could close the region’s infrastructure deficit over the coming years………………………………………..Full Article: Source

Global oil funds get more bang for bucks—in health care

Posted on 02 February 2015 by VRS  |  Email |Print

Global crude prices are in the midst of a slump, squeezing the bottom lines of oil companies and petro-states around the world. So how do sovereign wealth funds (SWFs) cope in this environment? The asset management arms of many oil-producing countries around the world are worth a collective $7 trillion. Most SWFs, particularly those based in the Middle East, are notoriously secretive yet have a lot of weight—and cash—to throw around in global markets.
Meanwhile, they are regarded as patient, big-picture moneymakers: A working paper from the International Monetary Fund notes that SWFs sustained heavy losses in the 2008 crisis, but recovered them “by demonstrating their willingness to be long-term investors and riding out their financial turmoil.”……………………………………….Full Article: Source

Qatar extends UK buying spree with Canary Wharf, IAG deals

Posted on 02 February 2015 by VRS  |  Email |Print

After a pause in dealmaking, Qatar is back, and the world’s richest country per capita has once again picked the UK as the top destination to deploy its billions. A Qatari-led group succeeded in buying London’s Canary Wharf on Friday, ending a battle for control of the financial district that began in November.
Qatar Airways, meanwhile, announced that it bought 9.99% of British Airways parent IAG for £1.15bn ($1.7bn). One twist this time around: While most of Qatar’s stakes have been purely financial investments, the IAG purchase is driven by corporate operational strategy………………………………………..Full Article: Source

Mega-funds start to beat retreat from emerging markets

Posted on 28 January 2015 by VRS  |  Email |Print

Big pension, insurance and sovereign funds that kept faith with emerging markets during the massive selloffs of 2013 and 2014 may be starting to waver, potentially depriving the sector of a key source of support. while sovereign funds withdrew cash from emerging assets in three of the past five quarters, eVestment said pension funds, possibly under pressure to meet the needs of ageing populations, had maintained inflows.
Pension funds reporting to eVestment ploughed $20 billion into emerging markets in 2013 and $17.5 billion in the first nine months of last year. That contrasted with $11 billion in redemptions last year by sovereign wealth funds it tracks………………………………………..Full Article: Source

Gulf Arab sovereign wealth funds

Posted on 20 January 2015 by VRS  |  Email |Print

Plunging oil prices could prompt Gulf Arab sovereign wealth funds to pull tens of billions of dollars out of global markets this year, with much of the money expected to come out of U.S. dollar debt and deposits with banks abroad.
For over a decade, the funds of the six-nation Gulf Cooperation Council (GCC) have been big players in the securities markets of the developed world. They have grown rapidly; including the foreign assets of Saudi Arabia’s central bank, the GCC’s sovereign funds now total about $2.43 trillion, according to the International Monetary Fund. Most of that is invested overseas………………………………………..Full Article: Source

Canada’s Sovereign Wealth Funds: A Question of Consolidation

Posted on 19 January 2015 by VRS  |  Email |Print

It is a well-established fact that Norway has a massive sovereign wealth fund (SWF) from its oil resource, totaling US$893 billion; other oil producers such as the U.A.E. and Saudi Arabia have sizeable SWF’s as well, valued at $773 billion and $757 billion each [1]. However, it might come as a surprise that Canada also has a sovereign wealth fund; Alberta’s Heritage Fund which was built from Alberta’s oil income has a portfolio of $17.5 billion
Now, $17 billion is a large sum of money. In comparison with the SWF’s of Norway or other oil producers, however, it is a paltry amount. Considering that Alberta’s fund was created fourteen years prior to that of Norway’s (1976 for Alberta and 1990 for Norway), it is rather shocking that Alberta’s fund is so small………………………………………..Full Article: Source

1MDB ‘dirt’ so great even Mideast investors AFRAID for their investments

Posted on 19 January 2015 by VRS  |  Email |Print

Mounting troubles at Malaysia’s government-owned strategic investment company 1Malaysia Development Berhad, or 1MDB, which has a focus on promoting foreign direct investment in Malaysia, have caused alarm bells ringing for two of its main investment partners from the Middle East, the Qatar Investment Authority and Abu Dhabi’s Aabar Investment.
1MDB was up in 2009 by Malaysian Prime Minister Najib Razak “to drive strategic initiatives for long-term economic development” in Malaysia and has been focused on development projects in the areas of energy, real estate, tourism and agribusiness. But lately more on high-profile projects which came under fire from opposition politicians and media such as the Tun Razak Exchange, a new financial district in Kuala Lumpur named after Najib Razak’s father and partly funded by Aabar, and the 200-hectare Bandar Malaysia project, an integrated urban development also in Kuala Lumpur, of which one of the partners is the QIA………………………………………..Full Article: Source

Khazanah to continue invest overseas but will not neglect domestic market

Posted on 15 January 2015 by VRS  |  Email |Print

Khazanah Nasional Berhad will continue to invest overseas pending clarification of a directive for government agencies and companies to spend their money in Malaysia. The sovereign wealth fund, however, stressed that it would not neglect the domestic market and that it was ready to play a role in investing in the national economy.
Khazanah managing director Tan Sri Azman Mokhtar said at the same time, it was still not clear whether the directive, which had reportedly been issued by the Treasury, was applicable to Khazanah, since it is a company and not a statutory agency strictly bound by government directives………………………………………..Full Article: Source

Oil prices to stay low longer

Posted on 13 January 2015 by VRS  |  Email |Print

Global oil prices are most unlikely to rebound to $100 levels in near term. If the prices stay at current levels, Qatar may run a budget deficit in the current fiscal, though marginal, top market analysts said. If oil prices continue to stay at $50 levels, Qatar will face a marginal deficit in its budget ranging $5bn-$10bn. But Qatar’s Sovereign Wealth Fund (SWF) is healthy enough to meet its planned funding.
The estimated savings of the government are more than $150bn. If you look at these figures, the projected capital spending for the next five years will not be a problem. On the possible funding gap, in the event of dropping oil prices, Private sector is capable of filling the gap………………………………………..Full Article: Source

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