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Sovereign Wealth Funds Briefing 08.Oct 2008

Posted on 08 October 2008 by VRS |  Email |Print

From Reuters: A committee of top Nigerian economic advisers has finalised a plan to set up a sovereign wealth fund aimed at softening any impact falling oil prices may have on the world’s eighth largest crude oil exporter.

Finance Minister Shamsuddeen Usman told Reuters a committee including Central Bank governor Chukwuma Soludo and President Umaru Yar’Adua’s economic adviser submitted a blueprint for the fund after deliberating on it for more than a year. The fund could allow a certain percentage of the nation’s revenues to be invested in international markets, providing a cushion from tumbling oil prices….. Full Article: Source

Posted on 08 October 2008 by VRS |  Email |Print

Sovereign wealth funds (SWFs) are shifting investments away from the United States and Europe and into the Middle East and Asian economies. The trend, highlighted by Monitor Group, an advisory and consulting firm, in its April – June 2008 quarterly analysis of global SWF investments, indicates that SWFs are not exploiting current US or European downturns, but are focused on building opportunities in potentially lucrative emerging markets in the Middle East and Asia.

Indeed, investments in these regions accounted for 68 per cent of the total value of all publicly-traded deals in this period. In the second quarter of 2008 (Q2 2008), funds in the Monitor SWF transaction database executed 43 deals totaling $26.5 billion. In contrast those funds executed 42 deals totaling $58.3 billion during the previous quarter (Q1 2008)….. Full Press Release: Source

Posted on 08 October 2008 by VRS |  Email |Print

From Bi-me.com: A unit of Qatar Investment Authority (QIA) yesterday said it was looking into investing in Europe, including buying London office blocks worth up to £500 million (US$878 million), as prices were expected to fall.

“We are looking at buying office blocks in London because they are always in demand … we are looking at an investment of between £80 million and £500 million,” Ahmed al-Mazroei, Deputy CEO of Diar, said. Mazroei said Diar, the property arm of Qatar’s US$40 billion sovereign fund QIA, was looking to benefit from an expected decline of 15% to 20% in the European real estate market in the coming two years, which he said would make prices “cheap” in view of the liquidity crisis….. Full Article: Source

Posted on 08 October 2008 by VRS |  Email |Print

From Straitstimes.com: Changi Airport will get a new owner - Temasek Holdings - from July next year, when the Civil Aviation Authority of Singapore (CAAS) is transformed from a government to a corporate entity.

Temasek will set up a yet-to-be-named company to run the show, while the CAAS will be restructured to become the regulatory authority, overseeing air traffic services and licensing of airlines, aircraft and pilots. The regulator will cap the maximum revenue the operator is allowed to make per passenger to ensure that passenger and airline charges will not spiral out of control in the quest for profits…… Full Article: Source

Posted on 08 October 2008 by VRS |  Email |Print

From Guardian: Shares in British Land have been lifted by news that the Singaporean government has increased its stake in the property group. The country’s GIC sovereign wealth fund, which first declared a stake in January, has bought 500,000 more shares to take its holding to 6.16%. The news saw British Land climb 9p to 739p.

In January, the company’s shares were north of 900p but have fallen back in the wake of severe declines in property prices….. Full Article: Source

Posted on 08 October 2008 by VRS |  Email |Print

From Bloomberg: Telecom Italia SpA, Italy’s biggest phone service provider, said some sovereign funds expressed an interest in buying a stake in the company, though they haven’t made offers yet, Chief Financial Officer Marco Patuano said.

Milan-based Telecom Italia said Sept. 25 its board was informed of interest from investors interested in buying a stake in the company, although no proposal was received. The company said that it didn’t solicit the indications of interest….. Full Article: Source

Posted on 08 October 2008 by VRS |  Email |Print

From Chosun.com: The government’s foreign exchange stabilization fund, which is used to defend the won from volatile fluctuations against the U.S. dollar, has accrued losses of W26 trillion (US$1=W1,269).

The reason was massive losses from investing in derivatives products in the attempt to defend the won, compounded by foreign exchange losses due to fluctuation. The forex stabilization fund draws its resources by issuing stabilization bonds, so losses incurred must be filled using taxpayers’ money. In a report submitted to the National Assembly on Monday, the Ministry of Strategy and Finance said losses by the forex stabilization fund stood at W26.37 trillion as of the end of 2007. This means it will be impossible to repay W26 trillion out of the fund’s entire debt even if it sells off all its dollar holdings and other assets….. Full Article: Source

Posted on 08 October 2008 by VRS |  Email |Print

From Reuters: Russia will use one of its oil wealth funds to fund 450 billion roubles ($17.19 billion) of the 950 billion rouble subordinate loans package for banks, Finance Minister Alexei Kudrin said.

The 450 billion “will come from one of the funds which we have,” Kudrin said. Russia’s two oil wealth funds totalled $189.7 billion on Oct. 1….. Full Article: Source

Posted on 08 October 2008 by VRS |  Email |Print

From FT: Much attention has been directed to sovereign wealth funds as the new big players in financial markets. Less has been written about their cousins, sovereign pension funds in spite of calculations from Morgan Stanley that those from western Europe, the US and Japan alone have $4,400bn (£2,437bn, €3,062bn) in assets, far more than the $2,600bn held by SWFs.

SPFs are buffer funds, most established in the past 15 years, to build up reserves against the cost of unfunded state retirement benefits in the decades ahead. They merit individual scrutiny because several are far from similar in character or investment. ….. Full Article: Source

Posted on 08 October 2008 by VRS |  Email |Print

From Business-standard.com: The government is considering a sovereign long-term dollar-denominated bond overseas to raise funds to ease Indian banks and companies’ access to liquidity, which has been drying up owing to the global financial crisis.

The government plans to test the waters sometime in December this year or January next year when global financial markets are expected to stabilise. So far, India has stayed away from raising sovereign debt overseas…… Full Article: Source

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From Financialnews.com: Financial services-focused buyout firm JC Flowers is approaching a final close on its main buyout fund at about $6bn (€4.3bn) having had the backing of the Chinese Government and portfolio company Shinsei Bank.

However, one long-term investor said it declined to participate due to concern about the firm’s dependence on its founder, former Goldman Sachs financier Christopher Flowers. The fund is expected to close below the $7bn second fund Flowers raised in 2006…… Full Article: Source

Posted on 08 October 2008 by VRS |  Email |Print

From Rightsidenews.com: Over the past year the hike in oil prices has aroused concern among many in the United States about the potential geopolitical implications of the increased economic clout of the Gulf states.

The decision by the Gulf states to diversify their foreign assets and to use billions of petrodollars to buy Western stocks in various corporations and particularly in banks raised the concern that a foreign foothold in the large financial institutions and conglomerates is liable to become a means of political leverage. This concern led to the formulation of various regulations in the United States and several European countries to strengthen oversight of the activities of the foreign sovereign wealth funds…… Full Article: Source

Posted on 08 October 2008 by VRS |  Email |Print

From Inquirer.net: The country’s gross international reserves edged slightly lower in September to $36.69 billion from $36.74 billion in August, the central bank said.

The monetary authority said the decline was partly due to foreign debt payments by the government and the withdrawal of some currency deposits by state-run Power Sector Assets & Liabilities Management Corp’s (PSALM). PSALM, the agency overseeing the privatization of the government’s power assets, has been repaying debts of the National Power Corp (Napocor) ahead of schedule to try to turn around the finances of the state-run power producer….. Full Article: Source

Posted on 08 October 2008 by VRS |  Email |Print

From Forbes: Singapore state investor Temasek Holdings kicked off the sale of electricity generator PowerSeraya on Tuesday, in a deal that could fetch around $2.5 billion.

PowerSeraya, the last of three power firms that Temasek is selling as part of Singapore’s efforts to liberalise its power-generating sector, provides about 28 percent of the city-state’s electricity. It has a capacity of 3,100 megawatts (MW) but this will rise to 3,900 MW by 2010 as the firm is in the process of building an 800 MW capacity natural gas-fired plant. ….. Full Article: Source

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