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Sovereign Wealth Funds Briefing - Archive | December, 2008

What we could learn from the Norwegians

Posted on 18 December 2008 by VRS  |  Email |Print

From I was bemused to note that Norway has just announced that it is going to dip into its $332bn sovereign wealth fund (£222bn) to finance a new fiscal spending package.

The oil-rich Norwegians will use the fund, the world’s second largest after Abu Dhabi, to offset a rapid slowdown in economic growth next year. And it aims to use these funds to stimulate target sectors expected to experience the sharpest slowdown, such as the construction sector, and invest in public buildings, schools and infrastructure….. Full Article: Source

Persistent Edge offers hedge fund expertise to CIC

Posted on 18 December 2008 by VRS  |  Email |Print

From Persistent Edge is setting its sights on helping China Investment Corporation (CIC) manage its money. CIC has not had a good year with its cross-border investments – and that’s putting it mildly.

It’s the fact that they have passed the acid test of 2008 that is now prompting Persistent Edge to think laterally about how it could participate in the management of sovereign wealth money….. Full Article: Source

CIC eyes increase to private equity exposure

Posted on 18 December 2008 by VRS  |  Email |Print

From Sovereign wealth fund China Investment Corporation has held talks with several advisers and funds of funds about helping it manage an increase in its allocation to private equity.
…. Full Article: Source

Abu Dhabi braces for slowdown in projects

Posted on 18 December 2008 by VRS  |  Email |Print

From FT: With huge reserves in sovereign wealth vehicles and significant hydrocarbons resources that are expected to last a century, the emirate is better placed than most to absorb the ripple effects heading its way.

But even in Abu Dhabi, policymakers and businessmen are being forced to take stock. Oil prices have fallen sharply and liquidity from banks has dried up just as the emirate is embarking on an ambitious expansion programme….. Full Article: Source

The formula of mixed government and private investments to reform the world

Posted on 18 December 2008 by VRS  |  Email |Print

From Never in the Dark Again. Central Banks face the challenge of recovering global financial stability. Their opportunity is to gain a higher information level, establishing proactive targeted exchanges with a comprehensive pool of players, starting from Sovereign Wealth Funds.

This crisis has shown the information failure of existing regulatory and supervisory framework nationally and internationally. It is now clear that new thinking and action by Central Banks are needed, thus opening up a powerful opportunity….. Full Article: Source

Looking to the future

Posted on 18 December 2008 by VRS  |  Email |Print

From Sovereign wealth funds will own up to 20 per cent of global real estate worth £474 billion by 2015, according to the latest data from property adviser CB Richard Ellis.

SWFs, the billion dollar state-backed investment vehicles which have bought major stakes in everything from investment banks to UK commercial property in the past few years, will increase their exposure to real estate from four to seven per cent over the next seven years, CBRE said. …. Full Article: Source

Al Khalij approves sale of 20% new shares to Qatar SWF

Posted on 18 December 2008 by VRS  |  Email |Print

From Bloomberg: Al Khalij Commercial Bank QSC, a Qatari lender, said its board approved the issue of as much as 20 percent new shares to Qatar Investment Authority, the country’s $60 billion sovereign wealth fund.

Al Khalij also rebranded BLC Bank (France) S.A., the United Arab Emirates-based lender it acquired in November, to Al Khaliji (France) S.A. and will invest $100 million in it to boost operations, the Doha-based bank said in an e-mailed statement late yesterday. Al Khalij will pay no cash dividend for 2008, it added. …. Full Article: Source

Mideast investment in Euro commercial real estate falls

Posted on 18 December 2008 by VRS  |  Email |Print

From Nick Axford, head of EMEA research in London at CBRE said the slump in the European commercial property market along with lower oil and equity prices has hit the spending power of wealthy Middle Eastern real estate investors and Sovereign Wealth Funds (SWFs), historically large buyers of commercial property overseas, especially in London.

“Direct investment in European property from Middle Eastern investors and SWFs is likely to be lower in the short term than we had previously expected due to the on-going uncertainty in the European investment market, lower oil prices which has slowed the flow of money into SWFs, and falling share and bond prices, again reducing the size of assets owned by these funds,” he said….. Full Article: Source

2008 turned financial heroes to zeroes

Posted on 18 December 2008 by VRS  |  Email |Print

From China Investment Corp., China’s sovereign wealth fund, bought a 9.9-percent stake in Morgan Stanley last December. The Government of Singapore Investment Corp. invested in Swiss bank UBS and US bank Citigroup. The city-state’s Temasek Holdings pumped billions into the former US investment bank Merrill Lynch.

Abu Dhabi Investment Authority made an investment of $7.5 billion in Citigroup — to name but a few….. Full Article: Source

Philippines and Qatar to establish billion-dollar investment fund

Posted on 18 December 2008 by VRS  |  Email |Print

From AFP: The governments of the Philippines and Qatar are to set up an investment fund worth more than a billion dollars, cabinet officials in Manila said Wednesday.

The fund was announced during a meeting between President Gloria Arroyo and Qatar’s Prime Minister Sheikh Hamad Bin Jassim Bin Jabr Al Thani last weekend….. Full Article: Source

IVG sells London building to a SWF

Posted on 17 December 2008 by VRS  |  Email |Print

From Bloomberg: IVG Immobilien AG, Germany’s largest commercial real-estate company, sold the former London headquarters of Lloyds TSB Bank Group Plc to an unidentified sovereign wealth fund for about 125 million pounds ($191 million).

IVG bought 14 Cornhill, a building in the city’s main financial district, for 21 million pounds in 2002, the Bonn-based company said today. …. Full Article: Source

Raiding the sovereign rainy day fund

Posted on 17 December 2008 by VRS  |  Email |Print

From Norway is the latest country to plan a fiscal stimulus to be rolled out in early next year. It is also the latest government with a sovereign wealth fund that plans to ramp up domestic spending.

It will likely turn to its sovereign fund, the government pension fund –global to finance this additional spending….. Full Article: Source

How Adia makes a play for a native minority

Posted on 17 December 2008 by VRS  |  Email |Print

From FT: Not only is Adia the world’s largest sovereign wealth fund - estimates of its size range from $450bn upwards - but it has also garnered a reputation as an incubator for the emirate’s sharpest minds. Many alumni go on to top roles in government or other state entities.

Yet it has had to adopt a rigorous approach to recruitment. Adia’s office is home to more than 1,000 people from 40 countries….. Full Article: Source

Terengganu fund to buy state assets

Posted on 17 December 2008 by VRS  |  Email |Print

From Terengganu’s own wealth fund, a RM10 billion fund to be managed by the Terengganu Investment Authority (TIA), will acquire some of the assets owned by the state.

It is learnt that the Terengganu state government would, in turn, use part of the proceeds from the disposal of assets (to TIA) to repay loans due to the federal government. The fund project was approved by the cabinet last week. …. Full Article: Source

Qatari Diar to provide finance for London’s Shard development

Posted on 17 December 2008 by VRS  |  Email |Print

From Qatari Diar Real Estate Investment Company is to provide the bulk of development finance for the Renzo Piano-designed Shard development at London Bridge.

The sovereign wealth fund said today it had agreed to provide a funding facility to London Bridge Quarter, the Jersey-registered holding company that is developing the Shard and a second adjacent development called London Bridge Place. …. Full Article: Source

Kuwait gov’t could start bourse fund next week

Posted on 17 December 2008 by VRS  |  Email |Print

From A planned multi-billion dollar state fund to buy into the Kuwaiti bourse could start investing as soon as next week, the finance minister said on Tuesday.

Last month, Kuwait asked its sovereign wealth fund the Kuwait Investment Authority (KIA) to set up the fund after the second largest Arab bourse, shed more than 30 percent this year in the wake of the global financial crisis….. Full Article: Source

Is this good news or bad?

Posted on 17 December 2008 by VRS  |  Email |Print

From The sovereign-wealth fund owned by the United Arab Emirates has a $7.6 billion investment in Citigroup. The U.S. government is Citi’s largest shareholder.

Citigroup chairman Win Bischoff explained, “This is in line with our commitment to the (UAE) market in general, and reflects our positive outlook on Dubai in particular.”…. Full Article: Source

Qatar sets up $1-bln SWF in Philippines

Posted on 17 December 2008 by VRS  |  Email |Print

From Qatar will set up a $1 billion sovereign fund to finance infrastructure and other development projects in the Philippines, and will issue 128,000 working visas specifically for Filipino workers, Malacañang said Tuesday.

This was firmed up during President Gloria Macapagal-Arroyo’s four-day official visit to the oil-rich Middle East state, where she met with Qatari Emir Sheikh Hamad Bin Khalifa Al-Thani and Prime Minister Sheikh Hamad bin Jassem bin Jabr Al Thani, said Trade Secretary Peter Favila, who accompanied the President….. Full Article: Source

The management of China’s international reserves and Its SWF

Posted on 17 December 2008 by VRS  |  Email |Print

From In 2007, China created the China Investment Corporation (CIC) as a sovereign wealth fund (SWF) using a small portion of its international reserve assets.

Many questions have been raised about the operation and management of the CIC and the nature of China’s other international investments, including, importantly, China’s international reserves….. Full Article: Source

The swimming naked awards

Posted on 17 December 2008 by VRS  |  Email |Print

From Scary sovereign-wealth funds were going to buy up the world. Then they were heroically going to rescue the banking system.

Now they are in hiding, counting their massive losses and wondering where all their money went. In second place, and closely related, oil: expensive one moment, cheap the next….. Full Article: Source

Bank of America had sought CCB share sale

Posted on 17 December 2008 by VRS  |  Email |Print

From CNN: In November, Bank of America increased its stake in China Construction Bank to 19.13% from 10.8% by acquiring 19.58 billion additional Hong Kong dollar- denominated H shares from Central Huijin Investment Co, an investment vehicle of China’s US$200 billion sovereign wealth fund.

The lockup period on the 19.58 billion H shares it bought then will expire on Aug. 29, 2011. It didn’t say, however, that it wouldn’t sell down its older holdings in CCB….. Full Article: Source

Future Fund holding firm

Posted on 17 December 2008 by VRS  |  Email |Print

From Telstra’s biggest shareholder has resisted weighing into debate over the performance of the telecommunications carrier’s management, with the $64 billion Future Fund saying it remains comfortable with its exposure to the company.

With the Future Fund no longer facing restrictions on the level of its $8.5 billion stake in the telco, the fund’s chief executive, Paul Costello, yesterday noted that the government-mandated investment fund was a natural seller of Telstra over the longer term. But he declined to outline a time frame or extent of a selldown….. Full Article: Source

Future Fund gets active

Posted on 17 December 2008 by VRS  |  Email |Print

From Having taken an indexed approach initially, the Future Fund is set to begin actively managing its equity portfolios in the future. The fund’s chief investment officer, David Neal, said the indexed approach had been taken while the investment team sorted out policies and strategies.

“We are now moving the fund to be more actively managed,” Neal said….. Full Article: Source

Dubai World repays $890 mln early, confirming ability to manage debt

Posted on 17 December 2008 by VRS  |  Email |Print

From Dubai World recently repaid $890 million (Dh3.269 billion) outstanding balance on a $1.2 billion loan it obtained from international banks last year to acquire a 9.4 per cent stake in MGM Mirage by Infinity World, a subsidiary of Dubai World.

The loan repayment by Dubai World is the third in a series by Dubai Government owned entities in the last few weeks. …. Full Article: Source

Oman gives green light to investment stability fund worth $390 mln

Posted on 17 December 2008 by VRS  |  Email |Print

From Xinhua: The Capital Market Authority of Oman has issued a license for the establishment of an investment stability fund worth 150 million rials (390 million U.S. dollars) in a bid to stabilize the country’s declining stock market, Oman Daily Observer reported on Tuesday.

The fund will have 60 percent government holdings, and the remaining 40 percent will be distributed to pension funds and the private sector, represented by banks, investment companies and the companies operating in securities, Minister of Commerce and Industry Maqbool bin Ali Sultan was quoted as saying. …. Full Article: Source

Qatar earmarks $1bln for Mindanao projects

Posted on 17 December 2008 by VRS  |  Email |Print

From The Qatari government will create a $1-billion sovereign fund to finance development projects in Mindanao in support of the peace talks with the Moro Islamic Liberation Front.

Finance Secretary Margarito Teves said Qatar National Bank and two other Doha-based banks are also planning to buy into Al-Amanah Islamic Bank of the Philippines. …. Full Article: Source

SWFs may be net sellers of world

Posted on 16 December 2008 by VRS  |  Email |Print

From Reuters: Sovereign wealth funds could soon turn into net sellers of world assets as diminishing return profiles prompt them to liquidate foreign assets accumulated in boom times and invest instead locally.

Such a shift is likely to come increasingly from those that have aggressively diversified away from liquid government bonds and have actively managed portfolios — a prerequisite for higher returns before the credit crisis….. Full Article: Source

Irish funding bail-out

Posted on 16 December 2008 by VRS  |  Email |Print

From FT: The National Pension Reserve Fund is Ireland’s own sovereign wealth fund, established when the country was running healthy budget surpluses. It had assets under management of €18.7bn (£16.8m) at August 31.

Under the legislation, it was not envisaged that money would be drawn down until after 2025. Brian Lenihan dismisses criticism, insisting there will be no downside for the taxpayer or the pension fund from a €10bn investment in the Irish banks, claiming instead that the fund will benefit from the “upswing” in the bank shares….. Full Article: Source

SWFs shrinking, economist claims

Posted on 16 December 2008 by VRS  |  Email |Print

From Forget $2 trillion in assets, says Brad Setser, a trade specialist - the biggest funds are falling well short of projections. While the combined assets of the largest sovereign funds were projected to hit or surpass $2 trillion this year, Setser estimates that they’re likely to total no more than $1.5 trillion.

“Sovereign wealth funds are fundamentally vehicles for investing central bank reserves,” wrote Mr. Setser. “And this year classic reserve assets have done rather well. Equities and real estate have not.”…. Full Article: Source

What role Arab funds can play in the global bail-out

Posted on 16 December 2008 by VRS  |  Email |Print

From The Economist magazine put at about 400 billion dollars the losses of the Arab sovereign funds due to the global financial turbulence Nabulsi believed that oil-rich Gulf states would be obliged to use part of their accumulated wealth to prop up their sinking stock markets and fulfill their development plans.

Brown’s Gulf trip appeared to have scored partial success when UAE and Qatari sovereign funds reportedly contributed 5.4 billion dollars to the bail-out of Barclays, one of Britain’s most famous banks. …. Full Article: Source

Edhec points the way for SWFs

Posted on 16 December 2008 by VRS  |  Email |Print

From FT: It is now widely recognised that sovereign wealth funds represent a dominant force on international financial markets. By some estimates, the total size of sovereign wealth funds currently stands at more than $3,000bn (£2,011bn, €2,264bn).

The growth is in fact likely to continue, and is expected to reach around $5,000bn in the next five years and $10,000bn within the next decade….. Full Article: Source

HSBC Private Equity’s latest fund raises $1.5 bln

Posted on 16 December 2008 by VRS  |  Email |Print

From HSBC Private Equity has raised $1.5 billion in commitments for its sixth fund. HSBC Private Equity Fund 6 will have HSBC Private Equity (Asia) as its investment adviser. The investors include sovereign wealth funds.

The latest fund is the sixth Asian regional private equity fund advised by HSBC Private Equity (Asia). The target size of the fund was $1.25 billion….. Full Article: Source

Some Latin American markets show profit potential in 2009, others pose risk

Posted on 16 December 2008 by VRS  |  Email |Print

From Chile boasts a $28 billion sovereign wealth fund, accumulated almost completely from its copper profits. That’s almost equal to a staggering 14% of the country’s GDP in cash savings!

This will enable Chile to implement counter-cyclical policies to keep growing at 3.5% to 4% next year – or about the current rate of growth, even with the worldwide meltdown….. Full Article: Source

Dubai World repays outstanding balance on US$1.2 billion loan facility

Posted on 16 December 2008 by VRS  |  Email |Print

From Last week Dubai World repaid the outstanding balance on a USD1.2 billion loan facility arranged and underwritten jointly by Royal Bank of Scotland, Credit Suisse and Deutsche Bank.

While refinancing had been offered, Dubai World determined the cost of capital was not competitive and instead elected to repay the outstanding amount under the loan of USD890 million from its operating reserves on December 11, 2008. …. Full Article: Source

Rescue packages tap pension fund reserves

Posted on 16 December 2008 by VRS  |  Email |Print

From IPE: The governments of both Norway and Ireland have announced plans to draw money from their national pension reserves for fiscal stimuli early next year.

Jens Stottenberg, Norway’s left-wing prime minister, has unveiled additional spending measures targeting those sectors sharpest hit by the downturn, such as building and infrastructure, to be funded by Norway’s NOK1.947trn (€245bn) Government Pension Fund – Global….. Full Article: Source

Qatar’s support for Manila

Posted on 16 December 2008 by VRS  |  Email |Print

From There were investment commitments, some agreements were signed and a decision to set up a joint sovereign wealth fund (SWF) to the tune of $1bln.

Qatar, through the Qatar Investment Authority (QIA), will be contributing $850mn while the remaining 15% will come from the Philippines government in the form of subscription….. Full Article: Source

$1tln Arab surplus gains prominence in dealing with crisis

Posted on 16 December 2008 by VRS  |  Email |Print

From The Economist magazine put at about $400bn the losses of the Arab sovereign funds due to the global financial turbulence .

According to the International Monetary Fund, Middle East and central Asian oil producers accumulated a current account surplus of $1.1tn between 2003 and 2007, compared with $150bn in the previous five years. …. Full Article: Source

SWFs: Stylized facts about their determinants and governance

Posted on 16 December 2008 by VRS  |  Email |Print

From This paper presents statistical analysis supporting stylized facts about sovereign wealth funds (SWFs). It discusses the forces leading to the growth of SWFs, including the role of fuel exports and ongoing current account surpluses, and large hoarding of international reserves.

It analyzes the degree to which measures of SWF governance and transparency compare with national norms of behavior….. Full Article: Source

SWFs to own 20% of global property by 2015

Posted on 15 December 2008 by VRS  |  Email |Print

From Sovereign wealth funds (SWFs) will own up to 20 percent of global real estate by 2015, new data from property adviser CB Richard Ellis (CBRE) showed on Sunday.

SWFs, the billion dollar state-backed investment vehicles which have bought major stakes in everything from investment banks to UK commercial property in the past few years, will increase their exposure to real estate from 4 to 7 percent over the next seven years, CBRE said….. Full Article: Source

SWFs from Asia to shun Western institutions

Posted on 15 December 2008 by VRS  |  Email |Print

From Telegraph: Western institutions should abandon all hope of Asia’s wealthy sovereign wealth funds coming to their rescue any time soon, the head of Standard Chartered’s Asian operations has warned.

China Development Bank and Temasek, the Singaporean state investment fund, have lost around £2bn between them after two capital injections into Barclays…. Full Article: Source

Norway set to dip into $332bln oil fund

Posted on 15 December 2008 by VRS  |  Email |Print

From FT: Norway is poised to dip more deeply into its $332bn (€248bn, £222bn) sovereign wealth fund to finance a new fiscal spending package.

The oil-rich Norwegians will use the fund, the world’s second largest after Abu Dhabi, to offset a rapid slowdown in economic growth next year….. Full Article: Source

Will the US take the “Silk Road”?

Posted on 15 December 2008 by VRS  |  Email |Print

From In the midst of the crisis, Washington is eyeing China’s Sovereign Wealth Fund, in which money has been accumulating due to the Asian giant’s trade surplus with most countries in the world, and most prominently with the US itself.

In fact, the US has preferred to fall into trade deficit to satisfy the wishes of its highly influential companies of moving their operations to China, not to meet the requirements of its national interest….. Full Article: Source

The rush to be seen in a convertible

Posted on 15 December 2008 by VRS  |  Email |Print

From FT: Pension funds and sovereign wealth funds are starting to invest large amounts in convertible bonds after forced selling by hedge funds pushed prices to all-time lows.

A wave of fund launches focused on the troubled convertible bond market has been accompanied by plans by large European pension funds and middle eastern sovereign wealth funds to invest heavily – with one planning to put $1bn into the market….. Full Article: Source

Malaysian Govt agrees to SWF

Posted on 15 December 2008 by VRS  |  Email |Print

From The deputy prime minister Datuk Seri Najib Tun Razak said on Saturday the government has agreed in principle to the proposal by the Terengganu government to set up the Terengganu Investment Authority (TIA), sovereign wealth fund, with an initial fund of RM10 billion (S$4.17 billion).

He said the cabinet gave the nod for the proposal at its meeting on Friday, reflecting a strong relation between the federal and state government. ‘In principle, the proposal has been approved by the cabinet,’ he said….. Full Article: Source

Chinese ‘cautious’ on acquisitions

Posted on 15 December 2008 by VRS  |  Email |Print

From China Investment Corp, the nation’s US$200 billion sovereign wealth fund, paid US$5 billion last year for 9.9 percent of Morgan Stanley and invested US$3 billion in Blackstone, the world’s largest private-equity firm. Both New York-based companies have lost more than two-thirds of their market value since the investments were made.

China Development Bank, which funds the nation’s public works, spent 2.2 billion euros (US$2.9 billion) for 3.1 percent of Barclays Plc in July of last year and bought another GBP136 million (US$203 million) of stock in June….. Full Article: Source

Dragon without fire

Posted on 15 December 2008 by VRS  |  Email |Print

From During the last few years, Chinese and Asian SWFs have been acquiring significant financial assets in industrialised economies. Build-up of the financial crisis saw American and European financial institutions eyeing these SWFs as major sources of funds.

Chinese SWFs saw this as a significant opportunity for diversifying portfolios in the US and Euro markets….. Full Article: Source

SWFs taste bitter losses

Posted on 12 December 2008 by VRS  |  Email |Print

From So far this year, the funds have seen declines of an estimated 18% to 25% of their assets, which could lead to closer scrutiny in the future. Norway’s $300 billion Government Pension Fund-Global, reported a negative 7.7% return against an international currency basket in the third quarter through September.

That was the worst performance in the 18-year history of the fund, which invests Norway’s oil revenues. And it doesn’t include the likely further drubbings in October and November. …. Full Article: Source

Terengganu looks to the future with $2.8 bln fund

Posted on 12 December 2008 by VRS  |  Email |Print

From Terengganu is setting up a RM10 billion ($2.8 bln) sovereign wealth fund to ensure its growth after its oil and gas resources are depleted. Called the Terengganu Investment Authority (TIA), the idea for the fund was mooted by Yang di-Pertuan Agong Tuanku Mizan Zainal Abidin and presented to the state and Federal Governments recently.

Tuanku Mizan, who is the sultan of Terengganu, said the state must plan for its future economic growth….. Full Article: Source

Border patrol

Posted on 12 December 2008 by VRS  |  Email |Print

From Mention the term “sovereign wealth fund” in Washington or London, and the typical image you evoke is of a hushed, hypermodern office full of be-robed Gulf State bankers moving huge sums of money into offshore investments – and away from their domestic economies, where, until recently at least, such monies posed a real risk of sparking rampant inflation.

Now the French President Nicolas Sarkozy is trying to flip that image on its head by importing and revamping the sovereign wealth fund model – and he’s pushing the concept in a curiously defensive direction….. Full Article: Source

Turkey hopes to lure in Gulf funds for liquidity

Posted on 12 December 2008 by VRS  |  Email |Print

From A committee formed by Turkey’s top-level officials will invite Saudi Arabia’s investment fund, which is considered to be the world’s largest sovereign wealth fund, as well as other investment funds in the Gulf to invest in Turkey.

Besides the giant investment fund Saudi Arabia is expected to set up, Turkey also aims to lure in an annual investment of at least $10 billion to $15 billion….. Full Article: Source

December 2008
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