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7/3/2009
Qatar to set up investment promotion office in China
China Daily states that, "The Qatar Investment Promotion Department is planning to establish an office in China next year to facilitate mutual investments between the two countries, a company executive said today.
The office will be set up in Beijing, according to Farzam Kamalabadi, President and Chairman of Future Trends International (Group) Corporation, a China-specialist US Corporation engaged in investment and trade consulting, media relations, and government lobbying.
The office will help Qatar investors, including Qatar's sovereign wealth fund, to seek investment opportunities in sectors such as banks, real estate, water treatment, infrastructure and chemical in China, said Kamalabadi, who once served as senior adviser to a number of national oil systems such as Oman, Iran, Kuwait, and China."
read more: China Daily
Press Release states that, "Teck Resources Limited ("Teck") (TSX:TCK.A and TCK.B, NYSE:TCK] announced today that China Investment Corporation (”CIC”) has agreed to purchase through a wholly-owned subsidiary 101.3 million Class B subordinate voting shares of Teck for C$17.21 per share. Teck will apply the net proceeds of the transaction to reduce outstanding bank debt. On closing, CIC will indirectly hold approximately 17.5 per cent of Teck’s outstanding Class B subordinate voting shares, representing approximately 17.2 per cent equity and 6.7 per cent voting interests in Teck. Upon completion of the transaction, Teck’s Class A shareholders as a group will hold a 61.8 per cent voting interest in Teck with Temagami Mining Company Ltd. holding a 28.5 per cent voting interest.
Teck President and CEO Don Lindsay said: 'This transaction will have an immediate and very positive effect on Teck’s balance sheet, and represents an attractive opportunity for Teck to establish a relationship with a major Chinese financial investor, with a deep understanding of China, the world’s largest consumer of our principal products.'"
read more: Press Release
7/3/2009
French state nuclear giant Areva invites new investors
AFP reports that, "French state-controlled nuclear giant Areva said Tuesday it was opening its capital to new investors and would sell a subsidiary to raise money for massive investments in new nuclear technology.
The company also said it was considering the sale of its stakes in French metal mining group Eramet and Geneva-based computer chip maker STMicroelectronics.
The Financial Times reported earlier that the French government was preparing a capital increase and could sell a 15-percent stake to Asian and Middle Eastern investors for two billion euros (2.8 billion dollars).
The FT reported Mitsubishi Heavy Industries (MHI), Areva's Japanese partner, was set to take a stake in the French company. MHI told AFP it had not received an offer to buy a stake but would study such a proposal. The French government is also in talks with sovereign wealth funds such as Mubadala of Abu Dhabi over their participation in a capital increase, which will be launched later this year, the FT said. France produces most of its electricity from nuclear power and French energy groups like EDF, Total and GDF Suez have previously been touted as possible investors in Areva. The report comes amid growing interest in nuclear power around the world, sparked by fears of climate change, worries about the reliability of supplies from the Middle East and Russia and record high oil prices in 2008."
read more: AFP
6/29/2009
PRESS RELEASE: The Sovereign Wealth Fund Institute to unveil new business segment featuring anonymous asset listing platform and capital introduction services
The founders of the Sovereign Wealth Fund Institute, during a meeting on June 10 in Tokyo, authorized the announcement of plans to unveil a new business segment that will provide asset listings and capital introduction services.
"The private institutional buyer centric marketplace will be an efficient, global alternative investment solution that utilizes connectivity, diligence, privacy and technology," said Michael Maduell, CEO "This unique platform will systematically provide buyers and investors with the necessary tools to select investment funds and assets."
The new business segment will provide the following features:
Anonymity Breadth Efficiency Diligence Liquidity
The name of the segment will be announced at the time of launch which will take place within the next month. Through the listing platform, Investors are able to access and search for hedge, equity, and private equity funds completely free of charge. In addition, they may also browse for institutional grade assets like real estate offices to large scale infrastructure projects. Active participants are selected and carefully screened before given access to the buyer centric marketplace.
"This is a brand new approach to a rather untapped marketplace that we have discovered during a unique time of recovery for the global business environment," said Maduell. "Not only will investors, including sovereign wealth funds and other institutional buyers, be able to able to find high quality investments at favorable prices, but legitimate sellers and fund managers will be able to gather exposure on their opportunities, and potentially tap into needed liquidity."
The scheduled launch of the new business segment will be announced on the Sovereign Wealth Fund Institute web site at www.swfinstitute.org estimated within the next month. All questions and media inquiries may be directed to swfinstitute@swfinstitute.org.
read more: PRESS RELEASE
6/25/2009
Michael Maduell on BNN - What Happened to Sovereign Wealth Funds?
Galadari stakes transferred to Investment Corporation of Dubai
According to Gulf News, "Dubai government stakes in Galadari Group have been transferred to the Investment Corporation of Dubai (ICD) as stated in decree No 18 of 2009, issued by His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai.
The ICD is the investment arm of Dubai government and has a portfolio ranging across all spheres of the economy, including finance, transportation, utilities and energy, industrial, real estate and leisure.
Under the decree, all stakes were transferred to the ICD which replaces Dubai government in all rights and liabilities."
read more: Gulf News
6/22/2009
Shell Gas Find in Norway May Be Biggest in 12 Years
Europe’s largest oil company, made a natural gas discovery at a record depth in the northern Norwegian Sea that may equal the size of Norway’s annual production of the fuel. The find may the biggest since Ormen Lange in 1997. Norway, the world’s fifth-largest oil exporter and second-biggest gas supplier, is boosting gas output to make up for dwindling crude production after 40 years of pumping oil. The country is opening more of its unexplored northern waters to drilling in areas such as the Norwegian Sea.
Shell, operator of the prospect, made the find in a wildcat well at a depth of 1,376 meters (4,515 feet), the greatest water depth ever in Norway, the directorate said. Wildcat wells are drilled in zones not known to be productive. Shell holds a 50 percent stake in the field and StatoilHydro ASA 40 percent. GDF Suez SA bought a 10 percent stake from Shell on Dec. 23, in a deal that was approved by the Norwegian authorities late May.
read more: Bloomberg
6/19/2009
Angola to launch sovereign wealth fund in 2009
Reuters reports that, "Angola plans to launch a sovereign fund in 2009 to invest the oil-producing nation's wealth abroad, Finance Minister Severim de Morais said on Friday.
Plans to create the fund, known as the Fundo Soberano Angolano, were announced in November by President Jose Eduardo dos Santos, but the project has since been delayed due to the global economic downturn.
Asked whether the fund would be launched this year, de Morais replied: 'Yes, our aim is to launch the fund in 2009.'"
read more: Reuters
6/17/2009
Qatar PM: Details on Porsche deal within 3 weeks
Qatar will announce the details of the country's sovereign wealth fund's bid to buy into indebted German sports carmaker Porsche within two to three weeks, Qatar's prime minister said. Sheik Hamad Bin Jassem Al Thani refused to confirm reports that the Qatar Investment Authority is eying a 25 percent stake in Porsche Automobil Holding SE, saying that the investment fund is still in the negotiating stage about the stake.
In a meeting Tuesday night with businessmen in the Qatari capital, Hamad said the QIA and Porsche are legally bound to not disclose details for now. But "within two or three weeks, the picture will become clearer," the prime minister added.
read more: Business Week
6/16/2009
Goodman forms partnership with China Investment Corporation
Press release states, "CIC participation in Finance Facility CIC has committed to the Facility on the same terms as those announced to the market on 19 May 2009. To facilitate CIC’s participation, Macquarie Bank and its associates have sold down A$15m of their exposure which combined with CIC’s commitment of A$200m takes the final Facility size to A$485m. The Facility will not be increased in size beyond A$485m. Goodman and CIC have agreed to work in good faith towards a broader relationship between
the two groups.
Greg Goodman, Group CEO of Goodman said: 'We are very pleased with the support shown to the Group by CIC and are excited about the opportunity to partner with an institution of this calibre as we seek to grow our business globally. We view a relationship with CIC as highly strategic and believe that together we can capitalise on the significant opportunities created by current market conditions.'
The key terms of the A$485 million Facility are as follows:
9 month term expiring in February 2010, extendable for a further 15 months; and Secured facility with covenants comparable to those in Goodman’s existing common
terms deed poll.
In conjunction with the Facility, additional Options will be granted over 255.3 million Goodman stapled securities with a two year term (Options). These additional Options are to be issued with a strike price of $0.40 and the lenders will share the two tranches of Options on a pro rata basis.
Approval from Australia’s Foreign Investment Review Board will be sought in respect of CIC’s participation in the transaction. The issue of options (apart from the first 120 million Options which were issued within placement capacity) will also be subject to security holder approval. In the event that the Options are not approved by security holders, the lenders under the Facility will be entitled to a cash amount from Goodman equivalent to the value of the Options as if they had been granted and were exercised. Further details of this grant will be distributed as part of a notice of extraordinary general meeting."
read more: Goodman Press Release
6/12/2009
Crisis Shows Brazil's Strengths As Investment Venue
Wall Street Journal reports, "Alan Thompson, managing director for Latin America at Temasek Holdings, Singapore's sovereign wealth fund, agreed that Brazil's strong financial system is an important factor in the country's strong economic growth potential. Not a single bank failure has occurred in Brazil since September 2005 when Banco Santos was closed in what Brazilian bank regulators called an isolated event.
'Over the last two years, we recognized that the economic world order is changing,' said Thompson, who said Temasek has made several investments since establishing a presence in Brazil last year.
Thompson also said Brazil's moderate inflation of 4% was the result of well-developed institutions that drive monetary policy. He cited stable fiscal policy as the reason Brazil has become a net creditor to the rest of the world and accumulated $200 billion in foreign exchange reserves. The global financial community has recognized Brazil's new place in the world. Standard & Poor's upgraded Brazil's sovereign debt to investment grade last year. Foreign investors poured in a record $45 million of direct investment in 2008. "
read more: Wall Street Journal
6/12/2009
Renaissance's Simons Delays Retirement Plans
Wall Street Journal reports, "Renaissance Technologies founder James Simons this year took steps to retire from his famed hedge-fund firm but has put the plans on hold for now, people familiar with the discussions say. The firm won't discuss the reasons behind his moves. But Mr. Simons appears increasingly willing to part with at least some control of his hedge-fund firm, one of Wall Street's most famous, successful and secretive. The 71-year-old executive has traveled to China to talk with officials of the China Investment Corp., the $200 billion sovereign-wealth fund, about selling a multibillion-dollar stake in Renaissance, people with knowledge of the matter said. It isn't uncommon for leaders of investment-management firms to sell stakes as they approach retirement. The China talks, which took place last year, didn't lead to a deal, the people said. But this year, a top Renaissance executive told Wall Street associates that the firm could sell a stake, a person outside Renaissance who was involved in the talks said. CIC didn't respond to a request for comment."
read more: Wall Street Journal
6/8/2009
Singapore's GIC will be cautious, take few risks
Reuters reports, "The chairman of the Government of Singapore Investment Corp (GIC), the city-state's biggest sovereign wealth fund, said on Monday the fund will be cautious and take few risks. His comments came after the country's other sovereign fund Temasek saw big losses on its investments in Western banks.
'GIC will be cautious, low risk,' said Lee Kuan Yew in a discussion at an aviation meeting in Malaysia.
Temasek's new American chief Chip Goodyear would, however, "seize opportunities", said Lee, Singapore's former prime minister and the father of current prime minister Lee Hsien Loong. "
read more: Reuters
6/4/2009
Rio Tinto Group Scraps Chinalco Deal
NY Times reports, "the Chinese government’s largest investment ever in a Western company, a proposed $19.5 billion stake in the Australian-British mining giant Rio Tinto Group, collapsed early Friday, dealing a blow both to China’s global corporate ambitions and to its efforts to gain clout in the natural resources market.
The board of Rio Tinto announced the decision after meeting in London on Thursday, saying the company had ended the deal it struck in February to sell the stake to China’s state-owned Aluminum Corporation of China, also known as Chinalco.
The board said in a statement early Friday that it had ended the deal with Chinalco and would raise about $20 billion by issuing new stock and forming a joint venture with its longtime rival, the Australian mining giant BHP Billiton, the world's largest mining company."
read more: NY Times
6/3/2009
China Investment Corporation purchases $1.2 billion Morgan Stanley common stock
"June 2nd 2009: Morgan Stanley (MS) announced that it had priced a public offering of common stock for proceeds of approximately US$2.2 billion. The proceeds are intended to fully redeem the TARP preferred capital before the end of June.
In view of the excellent relationship with CIC and the preemptive rights CIC holds, MS notified CIC of the offering. CIC sees this as an opportunity to strengthen its relationship with MS, and it decided to participate in the offering and subscribe $1.2 billion common stock.
CIC had existing investments in MS before this transaction. On Dec 19th, 2007,CIC purchased $5.6 billion mandatory convertible securities into MS common stock, representing approximately 9.86% equity ownership in MS. Following Mitsubishi UFJ Financial Group, inc.’s investment in MS in October 2008, CIC’s equity ownership was diluted to approximately 7.68%. This new purchase will bring CIC’s equity ownership in MS back to approximately 9.86%, effectively reducing CIC’s overall cost basis and increasing the returns potential.
MS is a leading global financial service firm providing a wide range of investment banking, securities, investment management and wealth management services. MS is widely expected to be able to leverage on its strengthened financial position and will be on the road of resuming its successful trajectory amid the dramatic restructuring of the international financial services industry.
CIC has further strengthened its relationship with MS through the new investments. CIC remains optimistic in MS’ future growth and progress."
read more: China Investment Corporation
6/2/2009
1st Quarter 2009 Linaburg Maduell Transparency Index ratings
Alaska Permanent Fund Corporation Board of Trustees authorized a new asset allocation
"The Alaska Permanent Fund Corporation Board of Trustees authorized a new asset allocation and approved a manager search during their regular meeting on May 20 and 21 in Anchorage.
'We’re taking a fresh approach to how we view our asset allocation,' said Michael Burns, CEO 'We’re recognizing that some investments within an asset class may have more in common with other asset types with regard to expected risk and return. And since our goal at the highest level is to balance the risk and return of the total portfolio, it makes sense to segregate assets by their characteristics, rather than simply by type.'
The new asset allocation is as follows:
2% - Cash (investments with a duration of less than 12 months) 6% - Interest rates (government or government related bonds) 53% - Company exposure (stocks, corporate bonds and private equity) 18% - Real assets (Real estate, infrastructure and TIPS) 21% - Opportunity pool (includes absolute return and distressed debt)
The allocation includes real return mandates, a new asset allocation for the Permanent Fund. In the Fund’s absolute return mandate, managers generally focus on publicly traded assets, such as stocks and bonds. Under a real return mandate, managers would invest in the same range of assets as the Permanent Fund. They would be required to structure their portfolios to meet a 5% real return target with a same level of risk as the full Permanent Fund portfolio."
read more: APFC
5/27/2009
Mubadala Eyes Investment in French Firms
Khaleej Times reports that, "Mubadala Development Company, an investment arm of the Abu Dhabi government, on Tuesday signed a deal to explore joint investment opportunities in French companies. The memorandum of understanding between Mubadala and France’s Fonds Strategique d’Investissement, or FSI, aims to set up a framework for investing in sectors that are of mutual interest to both the companies. Potential areas for investment in listed or private French companies include technology, health sciences, bio-technology and renewable energy. The MoU was signed during a visit by French President Nicolas Sarkozy to the UAE capital.
'This partnership fits into our strategy to work with leading international organisations across a range of industries to develop and operate businesses that not only generate outstanding financial returns but also contribute to the economic diversification of Abu Dhabi and bring real and lasting benefits to its people,' said Mubadala CEO and Managing Director Khaldoon Khalifa Al Mubarak."
read more: Khaleej Times
5/27/2009
Singapore PM kills Temasek II idea to help local firms
Reuters reports that, "The Singapore government will help nurture local companies compete in international markets, but will not force its sovereign wealth fund Temasek to finance them as suggested by some legislators, Prime Minister Lee Hsien Loong told parliament on Wednesday.
'Government wants to help companies grow, is trying many ways and is willing to do more,' Lee said. 'But we don't believe that this can be done by the government by simply pouring money, or creating a 'Temasek II,' he said.
His remarks were in response to ideas floated by two members of parliament on Tuesday that Temasek could make a greater difference to the island-state by helping home-grown enterprises expand regionally and globally. The government has come under fire from citizens and lawmakers over losses at Temasek, in particular its ill-timed exit from Bank of America which resulted in a loss of over $3 billion."
read more: Reuters
5/22/2009
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StatoilHydro Sees Its U.S. Oil, Gas Output Doubling This Year
StatoilHydro ASA, Norway’s biggest oil company, plans to double U.S. production by the end of this year as new platforms begin pumping crude in the Gulf of Mexico. Oil and natural-gas output in the country will climb to the equivalent of about 60,000 barrels of crude a day from about 30,000 now, said Oivind Reinertsen, president of StatoilHydro’s U.S. and Mexico operations.
The company, which spent about $11 billion to re-establish a U.S. presence after returning to the country in 2005, targets 100,000 barrels of oil a day by 2012. The main drivers of this year’s increase are two deepwater Gulf projects: Tahiti, which started producing this month, and Thunder Hawk, which is scheduled to go online in the current quarter.
read more: Bloomberg
5/20/2009
Norges Bank hiring in Shanghai
Asian Investor states, "NBIM received approval as a qualified foreign institutional investor (QFII) from the China Securities Regulatory Commission in October 2007 and now runs a fund worth roughly $200 million in China. The Shanghai office is also responsible for maintaining the fund's Asia-Pacific portfolio, which as at end 2008, represented 16.2% of NBIM's equity investments and 5.8% of its fixed-income portfolio.
Now NBIM wants to add an investment manager to head up its global technology, media and telecom, or TMT, portfolio to be based in Shanghai. There are also openings for a new CIO, COO, chief risk officer, as well as chief treasurer in its London and Oslo headquarters."
read more: Asian Investor
5/19/2009
Greenspan Says Hong Kong’s Yam Was Right to Buy Stocks in 1998
Former Federal Reserve Chairman Alan Greenspan, who in 1998 criticized Hong Kong’s central bank for purchasing $15 billion in stocks during the Asian financial crisis, now calls it a savvy move. “It turned out that his timing was exquisite,” Greenspan said, referring to Joseph Yam, who plans to retire Oct. 1 after 16 years as chief executive of the Hong Kong Monetary Authority.
“It was a risky action, but he pulled it off,” as share prices rose for several years, the former Fed chief said in a telephone interview today. “I wouldn’t recommend that as a general rule for central banks.” Yam, 60, bought the shares 11 years ago in a successful effort to defend Hong Kong’s dollar. Greenspan told the House Banking Committee in September 1998 that the strategy would fail and erode “some of the extraordinary credibility” of the HKMA.
read more: Bloomberg
5/18/2009
GIC to stick with investment in Citi, UBS
Reuters reports that, "the Government of Singapore Investment Corp (GIC) said on Tuesday it plans to continue holding its stakes in Citigroup and UBS.
'GIC is a long-term investor and will continue with its investments in Citigroup and UBS,' a GIC spokeswoman told Reuters.
Some analysts had expressed concerns GIC and other sovereign funds might follow in the footsteps of Temasek, which sold off its 3 percent stake in Bank of America in the first quarter to realise a hefty loss of at least $3 billion."
read more: Reuters
5/18/2009
China’s Stockpiles Are New Sovereign Wealth Strategy, RBC Says
China is stockpiling commodities such as copper and iron ore as part of a reallocation of its sovereign wealth amid concern that the value of its dollar assets may decline, according to the Royal Bank of Canada. “It’s part of an overall desire to decrease its exposure to dollar assets,” said Brian Jackson, senior strategist at Royal Bank of Canada in Hong Kong, in an interview today. China fears the hundreds of billions of dollars the U.S. is spending on bank bailouts and stimulus will cause “higher inflation and a weaker dollar,” he said.
Premier Wen Jiabao has said he is “worried” about the safety of the nation’s $767.9 billion in holdings of U.S. Treasuries and called on the U.S. “to guarantee the safety of China’s assets.” Central bank Governor Zhou Xiaochuan has proposed a new global currency to reduce reliance on the dollar.
read more: Bloomberg
5/15/2009
Kuwait looks to raise stake in China's ICBC
Reuters reports that, "OPEC oil exporter Kuwait is looking to raise its stake in the Industrial and Commercial Bank of China(ICBC) and invest in Chinese energy and industrial sectors, its finance minister said on Friday. Speaking to Reuters on the sidelines of the World Economic Forum at the Dead Sea in Jordan, Mustapha al-Shamali also said the world's fourth-largest oil exporter would not reduce its dollar-denominated assets. Kuwait is home to one of the world's largest sovereign wealth funds, the Kuwait Investment Authority (KIA).
'We have an investment in ICBC. We have a portion of it and we are going to enlarge it,' Shamali said in an interview, without disclosing the size of the stake.
'We could get our share from the market,' he said."
read more: Reuters
5/15/2009
Temasek Sells Entire Stake in Bank of America
Bloomberg reports that, "Temasek Holdings Pte, a Singapore state-owned investment company that bought stakes in Merrill Lynch & Co. and Barclays Plc amid the global financial crisis, has sold its stake in Bank of America Corp. Temasek had received shares in Bank of America after the U.S. bank bought Merrill Lynch & Co. The investment company had paid about $5.9 billion for a 14 percent stake in Merrill Lynch.
'We have divested our shares in Bank of America,' Temasek said in an e-mailed response to Bloomberg News queries."
read more: Bloomberg
5/13/2009
Libya Looks at Taking Stake in Italy's Enel
According to the Wall Street Journal, "Libya's sovereign-wealth fund may take a minority stake in Enel SpA as part of the Italian utility's planned capital increase, according to Enel's chief executive and Libya's ambassador to Italy. In an interview, Enel CEO Fulvio Conti said the Libyan Investment Authority had recently expressed interest in taking a minority stake in the Italian utility. The fund could either buy shares in the open market or subscribe to an €8 billion ($10.9 billion) capital increase that Enel is planning in order to cut its debt load, Mr. Conti said.
'We would welcome their ideas. It is premature to say how much and if and when they would participate,' Mr. Conti said.
Mr. Conti has been making the rounds with investors in recent weeks to drum up support for the capital increase. A week ago, the executive traveled to Libya to make a presentation about Enel to Abdulhafid Zlitni, head of the LIA, said Hafed Gaddur, Libya's ambassador to Italy."
read more: Wall Street Journal
5/11/2009
Temasek, GIC stake rise in ICICI Bank under scrutiny
According to the Business Standard, "the finance ministry and the Reserve Bank of India (RBI) has asked the Securities and Exchange Board of India (Sebi) to examine whether a proposal by Temasek Holdings and Government of Singapore Investment Corporation (GIC) to increase their stakes in ICICI Bank would trigger the takeover code under which they would have to make an open offer to buy an additional 20%. The Singapore government has sought clarification on a proposal for the two companies to increase their stakes in ICICI Bank to 20 per cent, each holding 10 per cent. This would collectively make them the largest shareholders in the country’s largest private bank. Currently, Life Insurance Corporate is the single largest shareholder with 9.38%. The two Singapore investment vehicles currently hold 10.3 per cent in the bank — Temasek 8 per cent and GIC 2.3 per cent.
Sebi is yet to take a final view on the issue, sources said. The issue hinges on whether the two entities should be treated as one entity or not."
read more: Business Standard
5/10/2009
Abraaj Capital May Take Stake in Dubai's DP World
Dubai-based private-equity firm Abraaj Capital may take a minority stake in NASDAQ Dubai-listed DP World, in a vote of confidence for the Middle East's largest port operator, according to people familiar with the deal. Dubai World, which owns a 77% stake in DP World, said early Sunday that it's "engaged in discussions with a regional private equity firm which may or may not result in a transaction regarding a minority stake in DP World, coming largely from the free float."
Two government officials familiar with the negotiations who declined to be identified told Zawya Dow Jones Sunday that Abraaj was in talks with Dubai World about taking a stake in the port operator. "Abraaj submitted an offer and is in talks with the decision makers on the deal," said a government official, who declined to be identified. According to the official, this covers an initial proposal that may be followed by a formal financial offer. The interest of Abraaj in DP World will boost the operator, which has built a global network of ports including terminals in the U.K., China and Africa to add to Jebel Ali, the Middle East's largest commercial port facility.
read more: THE WALL STREET JOURNAL
5/7/2009
China Construction Bank Rises On Reports Of CIC Buy
Shares of China Construction Bank Corporation rose as much as 7.4% Thursday on reports China's US$ 200 billion sovereign-wealth fund may scoop up part of Bank of America Corp.'s (BAC) stake in the Chinese lender.
China Construction Bank was up 3.2% at HK$4.90 at the midday break on Hong Kong's stock market, having risen as high as HK$5.10 in the morning session. The benchmark Hang Seng Index was up 0.8% at 16,967.
read more: THE WALL STREET JOURNAL
5/7/2009
Brazil won't tap sovereign fund in 2009
According to Reuters, "Brazil will not tap a new sovereign wealth fund for key investment projects this year even though the economy may miss an official 2 percent growth forecast, Planning Minister Paulo Bernardo said on Wednesday.
'It is more likely that we use (the sovereign wealth fund) next year but we still haven't defined this. This year we will not use it,' Bernardo told the Reuters Latin American Investment Summit in Brasilia, Brazil's capital.
The fund was created last year and was originally aimed to help finance the expansion of Brazilian companies abroad."
read more: Reuters
5/4/2009
Dubai World eyes Zimbabwe game park in Africa push
According to Reuters, "State-owned holding company Dubai World said on Sunday its African unit was investing in a wildlife game reserve in Zimbabwe as part of plans to boost its investments in Africa. Dubai World Africa, which in March said it bought three top-end South African wildlife game parks, has been pursuing investments that boost its exposure to Africa's tourism sector, including investments in hotels and beach resorts.
'(Africa) is a place where you can see growth... double-digit growth,' Dubai World Chairman Sultan Ahmed bin Sulayem told the Arabian Hotel Investment Conference."
read more: Reuters
5/1/2009
Chinese sovereign wealth fund interested in taking a stake in Fonterra, says Prime Minister Key
The New Zealand Herald states, "Prime Minister John Key has revealed China's US$200 billion ($349 billion) sovereign-wealth fund has signaled its interest in a stake in NZ dairy giant Fonterra if it changes its capital structure. China Investment Corp chief executive Lou Jiwei made the fund's interest in Fonterra, and other New Zealand assets, clear in a meeting with Key at the Boao Forum for Asia two weeks ago.
But Key stressed it was up to Fonterra's farmer shareholders to resolve the appropriate capital structure. Sources told the Herald Key's preference would be for the NZ Superannuation Fund - rather than another nation's wealth fund - to take a stake in Fonterra. The Prime Minister has made clear to Chinese investors that New Zealand would welcome increased investment particularly in greenfields or co-ventures. Key also met a representative from the Canadian suitor for Auckland International Airport whose successful bid for a 40 per cent stake was overturned when Labour Cabinet ministers changed the overseas investment rules."
read more: New Zealand Herald
5/1/2009
Occidental Petroleum and Mubadala Sign Development and Production Sharing Agreement for the Bahrain Field Development
The press release states, "Occidental Petroleum Corporation and Mubadala Development Company (Mubadala), through its business unit Mubadala Oil & Gas, announced today that they have signed a Development and Production Sharing Agreement (DPSA) with the National Oil and Gas Authority of Bahrain (NOGA) for the further development of the Bahrain Field. Under this agreement, a Joint Operating Company will be formed to serve as operator for the project under the DPSA.
Oxy will hold a 48-percent interest in the DPSA, with Mubadala holding a 32-percent interest and a subsidiary of NOGA holding the remaining 20 percent.
'We are pleased to expand upon our existing relationship with Abu Dhabi and look forward to working with Bahrain on this exciting project,' said Dr. Ray R. Irani, Chairman and Chief Executive Officer of Occidental. 'Signing this DPSA is another important step in the implementation of our growth strategy in the Middle East, and the further development of the Bahrain Field will create significant value for the people of Bahrain and for our shareholders.'"
read more: Press Release
4/29/2009
China Investment Corporation’s Investment Departments Reorganized
The press release states, "ever since our inception in 2007, CIC’s management team has been committed to improving our corporate governance and investment strategy. Over the past year, we have developed a sound investment management system and a strong professional team.
CIC has recently reorganized its investment departments to further improve corporate efficiency, and boost its synergized ability to seize investment opportunities and maximize benefits for its shareholder.
Based on needs and requirements of their different asset classes, target markets, investment approaches, compliance and other factors, CIC has established four new departments, i.e. Public Market Investment Department, Tactical Investment Department, Private Market Investment Department and Special Investments Department, to replace Fixed Income Investment, Equity Investment and Alternative Investment departments."
read more: CIC
4/28/2009
Kuwait eyes profit from Citigroup stake -minister
According to Reuters, "Kuwait's finance minister expressed confidence in the Gulf Arab state's sovereign wealth fund investment in U.S. bank Citigroup, saying in remarks published on Tuesday that it could turn profitable.
'Our investment in Citi... is beneficial... and God willing we will reach a stage where it becomes profitable,' Mustapha al-Shamali told al-Rai newspaper.
The Kuwait Investment Authority (KIA), which manages state assets in the world's fourth-biggest oil exporter, has come under fire from some parliamentarians for investing $5 billion last year in U.S. banks Citigroup and Merrill Lynch has since been bought by Bank of America."
read more: Reuters
4/27/2009
Vietnam: State equity in firms poorly managed
VNS states that "state equity in former State-owned enterprises that have been equitised remains poorly managed due to the overlapping authority of ministries and provincial governments, State Capital Investment Corporation deputy director Le Song Lai told a conference last week on management of state assets.
'Even in equitised firms, ministries and provincial authorities still intervene in management, which undermines corporate governance and results in a lack of professionalism and accountability,' Lai said.
The authorized representative of State capital in many of these enterprises has not been identified, said Tran Tien Cuong, director of the enterprise policy research department of Central Institute for Economic Management, with the result that a number of agencies, organisations and individuals were involved simultaneously in exercising State ownership rights. Too often, these agencies were exercising rights that, in fact, belonged to another agency, Cuong said."
read more: VNS
4/27/2009
China calls for reform of global monetary system
AFP reports that, " China called Sunday for reform of the global currency system, dominated by the dollar, which it said is the root cause of the global financial crisis.
'We should attach great importance to reform of the international monetary system,' Chinese Vice Finance Minister Li Yong told the spring IMF/World Bank Development Committee meeting in Washington.
A 'flawed international monetary system is the institutional root cause of the crisis and a major defect in the current international economic governance structure,' Li said, according to a statement.
'Accordingly, we should improve the regulatory mechanism for reserve currency issuance, maintain the relative stability of exchange rates of major reserve currencies and promote a diverse and sound international currency system.'
As the world's main reserve currency, US dollars account for most governments' foreign exchange reserves and are used to set international market prices for oil, gold and other currencies. As the issuer of the key reserve currency, the United States also pays less for products and can borrow more easily. Li did not name the dollar but in late March the People's Bank of China Governor Zhou Xiaochuan said he wanted to replace the US unit which has served as the world's reserve currency since World War II."
read more: AFP
4/24/2009
Mubadala releases 2008 annual report
Some highlights of the report state, "Also included in the Annual Report is detailed information about Mubadala’s financial performance for the calendar year 2008 - a period of rapid business development. Mubadala’s total assets grew from AED39 billion in 2007 to more than AED54 billion by the end of 2008, representing an increase of 40 percent over the previous year. The company also saw sharp increases in revenues, up by more than 370 percent to AED6.7 billion compared to AED1.8 billion for 2007.
The strong performance was offset by the company’s cautious approach to the valuation of some investments as a result of the decline in Global stock-markets (the S&P 500 Index of leading stocks fell by more than 38% in 2008) and oil prices (which halved between January and December 2008, and ended the year more than two thirds down from their peak in July). This resulted in impairment charges for 2008 of AED8.8 billion spread across a wide variety of publicly and privately held investments in the USA and other markets and contributed to a loss of AED11.8 billion in 2008 against a profit of AED1.3 billion the year before."
read more: Mubadala
4/23/2009
Qatar fund cuts stake in Barclays to 5.8 percent
An investment fund run by the Persian Gulf state of Qatar says it sold 35 million shares in Barclays, cutting its stake in the British bank to 5.8 percent.
It says it sold the shares as part of a "volatility-driven portfolio management strategy." Qatar Holding is the main investment arm of the Qatar Investment Authority, the oil and natural gas-rich sheikdom's sovereign wealth fund. The holding company says it now holds 487.8 million shares in Barclays. That stake will rise by 326.2 million shares once it converts other investments it owns by the end of June.
read more: Forbes
4/17/2009
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4/14/2009
Brazil's Lower House Approves Sovereign Wealth Fund
Wall Street Journal reports, "The lower house of the Brazilian Congress on Tuesday night approved legislation making an existing Sovereign Wealth Fund into a permanent fixture. The Chamber of Deputies voted 274-102 to approve a government bill making the fund permanent and approving an initial total for it of 14.2 billion Brazilian reals ($6.5 billion). The Sovereign Wealth Fund was created late last year by Brazilian President Luiz Inacio Lula da Silva by a temporary executive order. For the fund to become permanent it requires congressional approval. Following Tuesday's Chamber of Deputies vote, the bill will move on to the Brazilian Senate, where approval is also expected.
The Sovereign Wealth Fund is equal to approximately 0.5% of Brazil's gross domestic product. The idea behind it is to create and maintain the fund from public revenues during periods of economic growth. Money locked up in the fund can then be spent during periods of economic downturn.
Currently, Brazil is facing the prospect of zero economic growth in 2009 after posting an expansion of 5.1% in 2008. So far, the administration of President Lula has not indicated any intention of unlocking the Sovereign Wealth Fund for spending this year. However, many economists and business leaders have said the government should spend some of the fund's money in order to stimulate Brazil's economy. "
read more: Wall Street Journal
4/11/2009
China’s Currency Reserves Rise Least in Eight Years
Bloomberg reports, "China’s foreign-exchange reserves, the world’s biggest, had their smallest gain in eight years as exports slumped and the slowing economy deterred investment from abroad. Foreign-currency holdings rose about $7.7 billion in the first quarter to $1.9537 trillion, the People’s Bank of China said today on its Web site. That was the smallest increase since the second quarter of 2001 and compares with a $40 billion jump in the fourth quarter.
China’s first-quarter trade surplus shrank 45 percent from the previous three months and foreign direct investment tumbled as the global recession choked off demand. Slower growth in the reserves may limit Chinese purchases of U.S. Treasuries just as the Obama administration seeks to sell record amounts of debt to fund a $787 billion stimulus package."
read more: Bloomberg
4/8/2009
UK Mandelson encourages sovereign wealth fund investment
Reuters reports, "Britain would welcome investments by sovereign wealth funds to bolster its economy, Business Secretary Peter Mandelson said on Wednesday. Gulf-based investment firms have poured billions of dollars in recent years into businesses ranging from Western banks and stock exchanges to sports clubs and circus troupes. Britain's economy will shrink by 3.7 percent this year, its fastest pace of decline since World War Two, and the government has little room for more fiscal support, the Organisation for Economic Cooperation and Development said last week.
'Yes, I have met sovereign wealth funds,' Mandelson told reporters in Abu Dhabi, capital of the United Arab Emirates, without giving further specifics.
'We welcome sovereign wealth fund investments, unlike some other countries that are hesitant, and we strongly encourage investments from the UAE and others into Britain.
We need liquidity in the system, we need funds to flow, we need credit to flow,' Mandelson said."
read more: Reuters
4/8/2009
UK fund managers set to win key Chinese mandate
The companies – Standard Life Investments, Aberdeen Asset Management and Martin Currie – are close to signing a deal after a review of more than 400 fund managers that applied for licenses from the China Investment Corporation (CIC) in early 2008. Sources said that the three British companies were among 20-25 international investment houses that will be granted a mixture of global equity and fixed-income licenses by the CIC. The value of the licenses has not been disclosed but the source said they earn the winners more than £100m in some cases.
read more: The Telegraph
4/3/2009
A Hallmark of Transparency - Alaska Permanent Fund shows Real Estate Holdings
Investment transparency is a concern for many governments and sovereign wealth funds. The Sovereign Wealth Fund Institute has noticed that many sovereign wealth funds are beginning to take steps to increase their transparency in recent months. The Alaska Permanent Fund is leading the way in investment transparency. They are one of the first sovereign wealth funds that publicly list their real estate holdings.
Sample Real Estate Investment Profile
120 East 87th Street: Retail 120 East 87th Street New York, NY Initial Investment Date: Feb 28, 1995 Percent Ownership: 100 Manager: L&B Realty Advisors, LLP
120 East 87th Street is a retail condominium comprised of portions of the first two floors and basement of a 14-story midrise residential condominium building. It has 78,024 square feet of leasable space and is located in an affluent area of New York.
Central Huijin Investment plans to buy a 38% stake in New China Life Insurance
Caijing reports that, "Central Huijin Investment Ltd., an arm of sovereign wealth fund China Investment Corp, will buy a 38% stake in New China Life Insurance Co. from the China Insurance Regulatory Commission (CIRC).
A person close to shareholders of New China Life, China’s fifth-largest insurer, told Caijing that the acquisition was approved by the State Council, China’s cabinet. The person added that the acquisition price will be set after Pricewaterhouse Coopers finishes its audit of New China Life’s 2008 accounts.
Central Huijin is a controlling shareholder in several Chinese financial institutions and is often called upon to restructure those in poor shape. The CIRC took 38 percent in New China Life following a 2007 investigation into alleged fund misuse at the insurer. It paid 2.7 billion yuan, or 5.99 yuan per share for its stake in the unlisted company."
read more: Caijing
4/1/2009
Australia approves Chinese Fortescue investment
Press release states "Today I approve the application by Hunan Valin Iron and Steel Group for up to a 17.55 per cent shareholding in Fortescue Metals Group, subject to the formal and strict undertakings I have sought from Hunan Valin, and which have also been agreed to by Fortescue Metals Group.
These undertakings are as follows:
Any person nominated by Hunan Valin to Fortescue's board will comply with the Director's Code of Conduct maintained by Fortescue; Any person nominated by Hunan Valin to Fortescue's board will submit a standing notice under the Corporations Act 2001 of their potential conflict of interest relating to Fortescue's marketing, sales, customer profiles, price setting and cost structures for pricing and shipping; and Hunan Valin and any person nominated by it to Fortescue's board will comply with the information segregation arrangements agreed between Fortescue and Hunan Valin.
Hunan Valin will report to FIRB on its compliance with these undertakings. These undertakings ensure consistency with Australia's national interest principles for investments by foreign government entities, which I set out in February 2008. They ensure the appropriate separation of Fortescue's commercial operations and customer interests, and support the market-based development of Australia's resources.
Penalties for non-compliance with these undertakings are contained in the Corporations Act 2001 and breaches of the Code of Conduct can lead to the director's removal from the company board.
I note Fortescue's involvement in negotiating the above arrangements, and its responsibility to its shareholders for enforcement of the company's Directors' Code of Conduct.
Under the proposal, Fortescue has agreed to issue new shares to Hunan Valin to raise funds for the next expansion phase of its iron ore mining operations in the Pilbara. Hunan Valin also intends to acquire some shares from other shareholders. Consistent with this approval and with its agreement with Fortescue, Hunan Valin will not hold above 17.55 per cent in total. It is on these bases that I have approved the acquisition under the Foreign Acquisitions and Takeovers Act 1975."
read more: Press Release - Australia - Treasurer
3/31/2009
Russia Central Bank: no early decisions on reserve currency
Reuters reports that, "The Russian central bank does not expect any decisions on a new global currency any time soon with the dollar remaining the main reserve unit, First Deputy Chairman of the central bank Alexei Ulyukayev said on Friday.
Reserve holders China and Russia sparked a heated debate ahead of the G20 summit in London next week proposing to use the International Monetary Fund's Special Drawing Rights as a new global reserve currency.
'This is a very lengthy process... For a very long time the dollar will stay the reserve currency used for both private and state investment, including by central banks and sovereign wealth funds,' Ulyukayev told Echo Moskvy radio station."
read more: Reuters
3/29/2009
Dubai World Welcomes MGM's $200M CityCenter Proj Payment
Dubai World Sunday welcomed a last-minute $200 million payment by MGM Mirage (MGM) for the CityCenter project in Las Vegas as a "sign of good faith", but warned it was a temporary solution to the liquidity problems the casino operator is facing.
MGM Mirage made a $200 million payment due Friday to its City Center project, including the $100 million owed by Dubai World, to keep the massive resort and casino project from halting construction and potentially falling into bankruptcy.
"Dubai World appreciates the support of MGM Mirage's bank group and the CityCenter joint venture's bank group in providing a waiver to its client that allows this payment," the investment company, which is owned by the emirate's government, said in an emailed statement.
"It is as an acceptable, albeit temporary, solution to the liquidity issues that MGM Mirage is facing, which are at the heart of the lawsuit filed in Delaware earlier this week," it said.
Last week, Infinity World - a subsidiary of Dubai World - sued MGM, alleging that the troubled casino operator breached the terms of their venture. MGM has said the suit is "completely without merit." Dubai World has blamed MGM for massive cost overruns on City Center. Earlier this month, MGM reported it swung to a fourth-quarter net loss on a $1.2 billion write-down, and the company said it saw weakness in gaming and the economy in general in the first quarter.
read more: WSJ
3/27/2009
Norway - Government Pension Fund – Global - Annual Report 2008 - Notes
Norway - Government Pension Fund – Global is one of the most transparent sovereign wealth funds in the world. The sovereign wealth fund is a shareholder in more then 7,900 firms that span the globe. They are trying to expose themselves toward emerging markets.
The fund’s ownership of global equity markets rose to 0.77%. Inflows of capital into the fund were record-high at NOK 384 billion and invested entirely in global equity markets The return on the fund was -23.3% in international currency, the weakest result in the fund’s history. Norges Bank Investment Management (NBIM) is making significant changes to its investment strategy in order to make better use of the fund’s size and long-term investment horizon.
Telegraph states, "Shirin Ismail, head of absolute returns investment strategies at Temasek’s standalone unit Fullerton Fund Management, told the Reuters Private Equity and Hedge Funds Summit in Singapore: 'This is an area we will add on because this is where we think it will give us that level of capital preservation that we need.'
Hedge fund withdrawals reached a record $159bn (£110bn) last year, according to Lipper, a unit of Thomson Reuters. Some commentators have predicted that as many as half of existing hedge fund managers could shut this year. However, the industry’s supporters argue that in a period of falling stock markets investors need the more sophisticated strategies hedge funds offer. "
read more: Telegraph
3/24/2009
Governor Zhou Xiaochuan of the People's Bank of China (PBC) writes "Reform the International Monetary System"
Zhou Xiaochuan writes, "the outbreak of the current crisis and its spillover in the world have confronted us with a long-existing but still unanswered question,i.e., what kind of international reserve currency do we need to secure global financial stability and facilitate world economic growth, which was one of the purposes for establishing the IMF? There were various institutional arrangements in an attempt to find a solution, including the Silver Standard, the Gold Standard, the Gold Exchange Standard and the Bretton Woods system. The above question, however, as the ongoing financial crisis demonstrates, is far from being solved, and has become even more severe due to the inherent weaknesses of the current international monetary system.
Theoretically, an international reserve currency should first be anchored to a stable benchmark and issued according to a clear set of rules, therefore to ensure orderly supply; second, its supply should be flexible enough to allow timely adjustment according to the changing demand; third, such adjustments should be disconnected from economic conditions and sovereign interests of any single country. The acceptance of credit-based national currencies as major international reserve currencies, as is the case in the current system, is a rare special case in history. The crisis again calls for creative reform of the existing international monetary system towards an international reserve currency with a stable value, rule-based issuance and manageable supply, so as to achieve the objective of safeguarding global economic and financial stability."
read more: Paper: Reform the International Monetary System read more: People's Bank of China
3/24/2009
Saudi Arabia Sets Up New Sovereign Wealth Fund to Invest In Foreign Stocks
Zawya states, "Saudi Arabia's ruler, King Abdullah, Monday approved the creation of a new sovereign wealth fund that will oversee the assets of the oil-rich kingdom's largest pension fund, according to a statement.
The new fund, to be called the Hassana Investment Co. Hassana Investment Co. will invest in real estate and commercial projects, and stock markets in the Middle East and overseas, according to the statement on the official Saudi Press Agency Web site. Its mandate will be to manage the assets of the General Organization for Social Insurance, or GOSI, the agency said. The creation of the new fund is a departure in strategy by Saudi Arabia, which has previously channeled most of its overseas assets through its central bank the Saudi Arabian Monetary Agency, or SAMA. The authority is thought to control assets worth around $500 billion mostly in treasuries.
Saudi's pension fund holds sizable positions in dozens of locally listed companies. Among these investments are a 9.9% stake worth 7.5 billion Saudi riyals ($2 billion) in Al Rajhi Bank and 11.2% of Etihad Etisalat Co., a mobile telecom operator, which is worth about SAR2.5 billion, according to Monday's closing prices. The fund also owns a number of real estate projects around the kingdom. Analysts estimate that GOSI has around $400 billion in total assets, mostly in the kingdom. Hassana which roughly translates to "protector," is fully owned by GOSI. The government didn't disclose the amount of assets the new company will manage."
read more: Zawya
3/19/2009
Exclusive Offer valid till April 19, 2009: Free Complimentary Issue with Sovereign Wealth Quarterly Subscription
Subscribe to the Sovereign Wealth Quarterly between March 19, 2009 and April 19, 2009 and receive the Q4Y2008 report for FREE.
Preview Article Q4Y08: Sovereign Wealth Funds and Sustainable Investment (interview with Dr. Matthew J. Kiernan)
The world of global investment is now in the early stages of a transformation more profound than anything it has witnessed in literally decades. There is a powerful, worldwide trend among major institutional investors to incorporate “sustainability” or “ESG” (environmental, social, and governance) concerns – notably climate change – into their global investment strategies.
One of the Prime Minister’s goals was to attract gulf investment into the UK. The benefit for Qatar’s fund is that the UK government pledges to transfer technology to the Gulf state. It is a win for Qatar as they want to diversify their industries from oil and gas, especially with the down market on energy...........
Preview Article Q4Y08: £ 250 Million Joint Clean-Energy Investment Fund is created by Qatar and the United Kingdom
The parties have signed a Memorandum of Understanding (MOU). The Country of Qatar and the UK agreed to establish a £250 million fund to pay for the development of technologies that help produce low-carbon-emitting energy. The UK Carbon Trust which was set up by the UK Government in 2001 is pledging £10 million plus a commitment to attract private capital worth around £90 million. UK Prime Minister Gordon Brown toured the Persian Gulf...........
read more: subscribe today
3/19/2009
Recent decrease in foreign purchases of US Treasuries & Notes
3/17/2009
South Korean Sovereign Wealth Fund Snags Tudor Vet.
Korea Investment Corp., the $24.8 billion South Korean sovereign wealth fund, has hired a Tudor Investment Corp veteran to serve as its chief investment officer. Scott Kalb, who had worked for Tudor and other asset management firms, will replace former CIO Guan Ong on April 1, Reuters reports. Kalb was also a managing director at Citigroup's Smith Barney International Asset Management. KIC manages part of the country's foreign currency reserves on behalf of the Bank of Korea and assets of the finance ministry. With the South Korean government planning to increase the asset size of KIC to $50 billion by 2010, a revised law, pending at parliament, will allow the wealth fund to buy domestic stocks and other assets. It invested $2 billion in Merrill Lynch early last year before it was bought by Bank of America, which has reportedly translated into heavy losses.
read more: FINalternatives
3/14/2009
Video: Zawya clip on Study for Sovereign Wealth Fund Institute
China’s Leader Says He Is Worried Over U.S. Treasuries
The NY Times reports that ,"the Chinese premier Wen Jiabao expressed concern on Friday about the safety of China’s $1 trillion investment in American government debt, the world’s largest such holding, and urged the Obama administration to provide assurances that its investment would keep its value in the face of a global financial crisis.
The Chinese premier Wen Jiabao spoke at a news conference on Thursday at the end of the Chinese parliament’s annual session.
Speaking at a news conference at the end of the Chinese parliament’s annual session, Mr. Wen said he was worried about China’s holdings of Treasury bonds and other debt, and that China was watching United States economic developments closely.
'President Obama and his new government have adopted a series of measures to deal with the financial crisis. We have expectations as to the effects of these measures,' Mr. Wen said. 'We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.'"
read more: NY Times
3/12/2009
Qatar sovereign wealth fund won’t invest for a time being
The Guardian reports that, "Qatar's sovereign wealth fund, one of the world's largest investors, has put buying on hold for the next six months and will then focus more on energy and commodities in a major strategic overhaul.
'For the next six months we will do nothing,' said Hussein al-Abdullah, executive director of the Qatar Investment Authority, a sovereign wealth fund with assets recently estimated to total $60 billion.
'Beginning in the second half of the year, we will review our strategy. The sectors we will focus more on are commodities, food, energy and water because it is an important sector and the prices will pick up,' he told reporters on Thursday on the sidelines of a conference in Dubai. Sitting on up to $4 trillion in assets, much of it from selling oil and other raw materials, most SWFs have been conservative in their investment choices, holding dollars, treasuries and shares in large U.S. and European companies."
read more: Guardian
3/11/2009
China's sovereign wealth fund sees "good opportunity" for international investment
"It's now a "good opportunity" for the China Investment Corp. (CIC), China's sovereign wealth fund, to make international investment, said a top CIC official here Wednesday.
'To some extent, the current international situation gives the CIC a good opportunity,' said CIC deputy general manager Wang Jianxi, who is also a member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), the top political advisory body.
'The major concern is when and how we should take actions,' said Wang during a panel discussion of the CPPCC National Committee's annual session.
As a passive financial investor, the CIC will stick to its initial purpose of increasing the investment proceeds of China's foreign exchange reserves and "adjust its investment strategies according to market conditions," said Wang."
read more: Xinhua
3/10/2009
Qatar eyes liquidity boost in banks' support move
Reuters reports that, "Qatar has asked its sovereign wealth fund to buy local banks' investment portfolios to boost liquidity and encourage lending, a finance ministry official said on Tuesday.
The Gulf Arab oil and gas exporter said on Monday it will buy the portfolios without saying how much it had allocated to carry out the programme, which sent stocks soaring.
'The main goal of this measure is to provide the necessary liquidity to the banks in order to facilitate lending,' Khalaf al-Mannai, undersecretary for the finance and economy ministry told Reuters in a telephone interview."
read more: Reuters
Sovereign Wealth Funds look at clean tech venture capital investments
According to Venture Beat, "Fisker Automotive, maker of a luxury plug-in hybrid vehicle called the Karma, has squeezed an additional $3 million out of its private investors, bringing its total capital raised to more than $100 million — a staggering feat considering the state of the credit market. The Irvine, Calif. company raked in $65 million in September but says the recent addition to its third round is just the right amount to put finishing touches on the Karma before it rolls into showrooms.
The $3 million addition came from Quantum Fuel Systems Technologies, Kleiner Perkins Caufield & Byers, Al Gharrafa Investment, Palo Alto Investors and Thomas Lloyd Capital. Qatar Investment Authority joined existing investors in the $65 million tranche in the fall."
read more: Venture Beat
3/1/2009
Abu Dhabi reviewing its Citigroup investment: sources
Abu Dhabi is assessing its $7.5 billion investment in Citigroup as the bank's problems deepen and consequences of a possible nationalization become clearer, according to sources close to the Abu Dhabi Investment Authority (ADIA). ADIA invested $7.5 billon last year in Citi through convertible bonds that pay 11 percent in interest, but it must start converting the bonds into 235.6 million shares in Citigroup from March next year. "Nothing has changed from ADIA's perspective at this point. ADIA's convertible bonds are due for conversion in a phased manner between March 2010 and September 2011, and that stands," an Abu Dhabi government official told Reuters.
read more: Reuters
2/26/2009
French sovereign wealth fund takes Valeo stake
France's sovereign wealth fund on Wednesday announced it had taken a stake in French auto parts group Valeo, a firm that has been targeted by a New York investment group pushing for a merger. The FSI said it's taken an 8.3% stake in Valeo and has 10.55% of the voting rights.
New York-based Pardus Capital Management, Valeo's top shareholder, has suggested the French firm merge with Visteon a rival auto parts maker in which Pardus also is the leading shareholder.
read more: MarketWatch
2/24/2009
Temasek Expands India Operations
According to Temasek, "Temasek Holdings Advisors India Pvt. Ltd (Temasek) has announced the expansion of its India operations with the launch of its Chennai branch office. While Temasek enjoys a strong presence in the North and the West, the Chennai office represents a strategic geographical diversification to focus on the large South India market, providing an ideal base from which to penetrate the untapped areas in the South. Temasek commenced its India operations in 2004 with the establishment of its Mumbai office."
read more: Temasek Holdings Press Release
2/23/2009
European PE Firm Apax Sells 10% Stake to Asian-Pacific Investors
Apax Partners has secured deals to sell holdings in its management company to two Asian-Pacific investors after protracted discussions with three parties. The sale should buttress the private-equity firm at a time when fund-raising is at a low and portfolio valuations are coming under pressure.
GIC Special Investments, the private-equity arm of sovereign-wealth fund Government of Singapore Investment Corp., and the A$59.6 billion Australian national retirement plan, Future Fund, took less than 10% of Apax’s management company. A potential third party, believed to be a Japanese investor, has used corporate vehicle CN Advisory to express its interest in joining Apax’s membership–-the formal way of owning a stake in the firm that is a limited liability partnership.
In a statement, Future Fund said the deal involved investors purchasing a stake of “around 10%” of the Apax Partners management company and performance fees, called carried interest, in Apax’s funds. The undisclosed net proceeds of Apax selling a stake were being reinvested in a permanent capital vehicle in which Future Fund would have a 10% stake and would have a principal objective to invest in future Apax funds.
read more: The Wall Street Journal
2/19/2009
Japan to waive tax on SWF's interest income
Reuters reports that "the Japanese government will waive the tax on the interest accrued on sovereign wealth funds' holdings in the country, the Nikkei business newspaper reported on its web site. Overseas investors generally face a 15 percent tax on interest income. Investors from countries with which Japan has bilateral tax accords are imposed a lower tax of 5 to 10 percent. The report said that for sovereign funds of treaty partners, Japan plans to exempt the interest from bond holdings, deposits and loans. Both corporate and government bonds will be covered by the exemption, but not stock dividends. Nikkei also said Japan has already reached a basic agreement on a tax treaty with Kuwait, while negotiations are ongoing with the United Arab Emirates and Saudi Arabia."
read more: Reuters
2/18/2009
Gulf sovereign wealth funds fret over US Treasuries
The Financial Times reports that, "Sovereign wealth funds in the Middle East are growing increasingly concerned about the health of the US Treasury market, raising questions about whether they will remain such active buyers of US government debt. Middle Eastern buyers are the fifth-largest investors in Treasuries after China, Japan, the UK and Caribbean banking centres, and their appetite could prove critical to US government plans to issue mountains of debt to fund stimulus efforts. So far there is little sign of a flight from the dollar or from Treasuries, but senior executives at several sovereign funds in the region say the US Treasury has been conducting a dialogue to reassure Middle Eastern investors that US government debt still offers value."
read more: Financial Times
2/16/2009
Norway's central bank to invest sovereign fund in UK and US Properties
The Independent reports that, "Norway's sovereign wealth fund is on the verge of an $18 billion (£12.5bn) shopping spree for landmark British and American properties. Norges Bank, Norway's central bank, which manages investments made from Norway's vast energy surplus, is understood to be ready to make its first investments by the end of the summer. Paul Golding, the former Merrill Lynch banker who heads the fund's UK arm, had been expected to start investing money for the fund last year. However Norges needed approval from the country's government, which was not forthcoming during the financial crisis last year. Mr Golding's three-man investment team is understood to have stepped up talks with property advisers in recent months ahead of getting the needed permission. Norges is likely to invest as a minority stakeholder in landmark buildings in both the UK and US while prices are low. If this proves successful, it will continue to invest in other markets."
read more: The Independent
2/13/2009
Oil fuels commodity-based Sovereign Wealth Fund growth - Proved oil reserves at the end of 2007
Sources: BP Statistical Review of World Energy June 2008, Sovereign Wealth Fund Institute
2/13/2009
Libyan Investment Authority eyes new investments with large cash pile
Reuters states, "Libya's sovereign wealth fund controls assets of more than $65 billion but has only up to 23 percent of its available cash funneled into investments, the fund's chairman said on Thursday.
The Libyan Investment Authority is one of several highly secretive investment funds owned by national governments that have become increasingly active in buying up Western assets, flush with cash from high oil prices in previous years.
The Libyan fund had a positive albeit small return on investment in 2008, after enjoying roughly a 15 percent return on investment in 2007, said Chairman Abdulhafid Zlitni.
'We're very liquid,' Zlitni, who is also Libya's planning minister, told reporters at a dinner in Rome in his honour that attracted the top brass of Italian business including Mediobanca Chairman Cesare Geronzi and UniCredit CEO Alessandro Profumo.
'And when you have cash now, you're king.'"
read more: Reuters
2/12/2009
Indonesia's Danamon says will buy back $300 million bond
According to Reuters, "Indonesia's fifth-largest lender, PT Bank Danamon Tbk, said on Thursday it plans to exercise its option to buy back $300 million of subordinated bonds as it has sufficient funds. Danamon, controlled by a consortium that includes Singapore's state investor Temasek and Deutsche Bank, said its net profit for 2008 fell 28 percent to 1.53 trillion rupiah ($129.5 million), from 2.117 trillion rupiah in 2007. The bank said the drop in profit was due to 804 billion rupiah worth of non-recurring expenses, which it said were related to unwinding foreign exchange forward contracts and provisioning."
read more: Reuters
2/11/2009
Economic Crisis Hits Sovereign Wealth Funds
Singapore and Kuwait are reporting billions of dollars in losses to their sovereign wealth funds in the latest symptom of the global economic crisis.
The Singapore state investment firm Temasek Holdings says the value of its investments plunged about 31 percent to $81 billion between March and November of last year.
Temasek has invested heavily in troubled banking companies, including U.S.-based Merrill Lynch and Britain's Barclays.
Kuwait's sovereign wealth fund also has taken a big hit from the credit crisis. A Kuwaiti lawmaker, Walid al-Tabtabai, says the oil-rich country has lost about $31 billion of its estimated $300-billion fund.
read more: VOA News
2/6/2009
Temasek Holdings Appoints Charles W. Goodyear as Member of the Board and CEO-Designate
According to the press release, "the Board of Directors of Temasek Holdings (Private) Limited Temasek today announced a leadership transition – Mr Charles Chip W. Goodyear will succeed Ms Ho Ching as Chief Executive to lead the Singapore investment company.
Mr Goodyear, 51, an American, joined the Temasek Board on 1 February. He assumes the position of CEO-Designate on 1 March and will succeed Ms Ho on 1 October 2009. Mr Goodyear retired from BHP Billiton on 1 January 2008 after leading the world’s largest diversified resources company through its rapid growth and expansion.
The appointment and leadership transition will further strengthen Temasek’s Board and management. The Board, including Ms Ho, has been addressing succession planning annually since early 2005.
Temasek Chairman, Mr Dhanabalan said, 'Ho Ching has been instrumental in bringing Chip on board. We have been working on this appointment for more than a year.'
Mr Dhanabalan added that Mr Goodyear shares the vision and values that underpin Temasek as a key Singapore institution and an international investment company. 'Chip presents a rare and unusual combination of investment and operational experience that can support the continued transformation of Temasek,' he said.
'Chip’s leadership and business experience, and his demonstrated capability in developing strong management teams give us the confidence that he will make a difference to Temasek just as Ho Ching and her predecessors have done over the last three decades.'
Ms Ho and Temasek’s management helped shape the Singapore company into a respected international investor."
read more: Temasek Press Release
2/6/2009
St Martins, a SWE of the Kuwait Investment Authority, buys luxury residential block in Tokyo
According to the press release the, "first acquisition in Asian market to trigger further investment in the region over the long term. International property investment and development company St Martins has made its first move into the Asian market by acquiring a luxury 27-storey high rise residential tower in central Tokyo for JPY 13 billion (£105 million), with a net yield above the historic average for such a quality property.
Nigel Brown, Managing Director at St Martins, said: 'This is the first of what we anticipate will be a number of investments in the region, subject to pricing and timing.'
He continued: 'Whilst we have been considering investment opportunities throughout Asia, including China, Hong Kong, Singapore Vietnam and Australia, our future Asian strategy is likely to focus on Japan, China and Australia. We are waiting for the right opportunities at the right prices that will offer potential for long term performance and represent properties that aren't normally seen coming to the market.'
'Whilst we will continue to review the markets, and specific opportunities, we consider that it may be later in the year before similar quality assets become available at attractive prices and any signs of recovery are seen in the markets. We anticipate a correction in the pricing in China to make investments more attractive in comparison for instance to yields now available in the UK and other developed markets. St Martins will also consider landmark opportunities in the major cities in Continental Europe and the UK when the markets become more stable.'"
read more: St. Martin Press Release
2/3/2009
South Africa and Qatar to Hold Bilateral Consultations
According to the press release, "South African Deputy Foreign Minister Sue van der Merwe will hold the first round of bilateral consultations with the Assistant Foreign Minister for Follow-Up Affairs of the State of Qatar Mr Mohammed Abdullah Al-Rumaihi at the Twelve Apostles Hotel and Spa in Camps Bay, Cape Town on Wednesday 04 February 2009.
Qatar Investment in South Africa and Africa
The Qatar Investment Authority has invested US$400 million in an investment fund, the PME Infrastructure Management Limited Fund. The fund is investing in infrastructure in Africa and is concentrating on the areas of transportation, communication and energy. According to the Government of Qatar, South Africa is the biggest beneficiary and of this fund which is considered to be the first investment by the Qatar Investment Authority in South Africa.
South African Investments in Qatar
South African companies have been fairly successful in obtaining contracts for major projects in Qatar. Sasol and Qatar Petroleum entered into a US$900 million joint venture gas-to-liquid facility at Ras Lafan. The plant was inaugurated on 6 June 2006 by the Minister of Minerals and Energy Bulelwa Sonjica."
read more: South Africa - Department of Foreign Affairs
2/2/2009
CEO of QIA interviewed on CNBC
Sovereign wealth funds are taking some of the biggest hits during the latest round of economic uncertainty. CNBC's Maria Bartiromo spoke with Sheik Hamad Al-Thani, Qatar's prime minister and CEO of the country's largest investment authority.
watch here: CNBC
1/30/2009
Some notes from the 2009 World Economic Forum - Davos
According to the website, "Tony Tan Keng-Yam, Deputy Chairman and Executive Director, Government of Singapore Investment Corporation (GIC), Singapore, said there would likely be a shake-out in the financial system into two tiers: first, a core of tightly regulated, large commercial banks working with lower levels of leverage than in the past; second, a group of “quasi banks” (private equity, hedge funds, etc.) with a different regulatory structure from commercial banks and no access to the central banks. Investment banks would probably come somewhere in-between, he said. It was normal that governments had intervened to prop up confidence. Now the question was how they would extract themselves in a way that provides incentives to shareholders, who will be necessary for a strong banking sector in the future. He also warned of the dangers of over-regulation stifling creativity."
read more: World Economic Forum
1/29/2009
Large SWF Redemption - Legg Mason assets under management decreased to $698 Billion
Legg Mason has reported results for 3Q of FY 2009. The report states, "AUM decreased to $698.2 billion at December 31, 2008, down $300.3 billion, or 30%, from December 31, 2007 and down $143.7 billion, or 17%, from $841.9 billion at September 30, 2008. In the third quarter of fiscal 2009, net client cash outflows were $77.0 billion. Equity outflows were approximately $17 billion, fixed income outflows were approximately $42 billion and liquidity outflows were approximately $18 billion in the quarter, the latter primarily driven by a partial redemption by a sovereign wealth fund with operating needs."
read more: Legg Mason Press Release
1/28/2009
It's too dangerous to invest, says head of Dubai sovereign wealth fund
The Times reports that, "The head of one of the world's leading sovereign wealth funds said at Davos today that there were bargains to be had but it was too early to make major long-term purchases as the global financial crisis was going to get worse. Asset prices were at very reasonable levels but it was still to early to make big bets on long-term investments, said Sameer al-Ansari, the chief executive of the $13 billion Dubai International Capital. Speaking on the sidelines of the annual meeting of the World Economic Forum, Mr al-Ansari said that the sovereign fund could see opportunities but remained nervous of markets as the financial system was broken.
'There (is) going to be a great opportunity in the next year or two to acquire assets at historically unprecedented levels,' said Mr al-Ansari.
'The region has to invest for the long term... choosing assets that represent good value for the region.'
However, he added: 'We’re still very nervous about making some big bets - we see the financial crisis getting worse. There’s not going to be a magic wand solution to the problem. The system as we know it is literally broken. We have to get money flowing again, we have to get liquidity flowing again, we have to get confidence back. That’s going to take time, that’s going to take two, three, four years. In the meantime the world is going to (get) poorer, standards of living are going to get worse and it’s not going to be pleasant.'"
read more: Times
1/26/2009
Kuwait sovereign fund takes stake in Gulf Bank
Kuwait Investment Authority, the oil-exporter's sovereign wealth fund, will own 16 percent in troubled Gulf Bank after the lender completed its capital hike, an official said on Monday. In December, shareholders in Gulf Bank approved a rescue plan ordered by the central bank to raise 375 million dinars (936.6 million pounds) in a 100 percent emergency rights issue to cover derivatives losses of the same amount. Under the rescue plan worked out by the government, the KIA was to buy up any remaining stock from the capital increase, which it will offer later to nationals in a public offering.
read more: UK Reuters
1/26/2009
Indian Government seeks cap on Temasek, GIC holdings in listed companies
According to the Economic Times, "The finance ministry has proposed that a key agreement between India and Singapore be amended to prevent two Singapore
government-owned investment entities — Temasek and GIC — from together holding more than 10% equity stake in any publicly-traded Indian company.
Under the current SEBI regulations, a foreign institutional investor (FII) cannot hold more than 10% in a single Indian company. Different FIIs owned by a common entity are classified as an FII group and are subject to the 10% cap. GIC and nine wholly-owned subsidiaries of Temasek are registered separately with the market regulator as FIIs, and as they have a common owner, they should have been categorized as an FII group, according to a note prepared by the ministry.
However, the Comprehensive Economic Co-operation Agreement (CECA) signed between the two countries in 2005 treats GIC and Temasek as unrelated and independent entities. It gave Temasek and GIC the right to hold 10% individually in a single company thereby allowing them the option to together increase their shareholding to up to 20% in a company."
read more: Reuters
1/25/2009
KIA allocates some holdings away from stocks towards cash
Reuters reports that, "The Kuwait Investment Authority (KIA), the Gulf Arab state's sovereign wealth fund, has reduced exposure to global stock markets since October, shifting assets instead into short-term cash funds, a government report said. In a briefing to parliament, the government said KIA had cut the ratio of international share investments in a key fund in a bid to minimize the effect of the global financial crisis on Kuwait, the world's seventh-largest oil exporter, according to a copy of the report obtained by Reuters on Sunday. The news comes after KIA, which manages Kuwait's substantial oil-generated assets, last year burned its fingers by buying into U.S. banks such as Citigroup and Merrill Lynch before both stocks nosedived and the latter filed for bankruptcy protection.
KIA, which like other sovereign wealth funds does not disclose its investment policy, had come under fire in parliament for making those investments."
read more: Reuters
1/23/2009
Apollo Closes Buyout Fund Near $15 Billion Target
Dow Jones reports that, "The latest fund was at $12.5 billion in April with the majority of that amount collected in 2007. The vehicle raised $3 billion between the end of 2007 and April. That meant that Apollo was also somewhat sheltered from the market tumult following the Lehman Brothers Holdings’s bankruptcy in September, which took overall private equity fund-raising into a more severe slowdown. The majority of capital for the vehicle was raised before that event as Apollo had closed on $14 billion as of August.
Limited partners in the new fund include Teacher Retirement System of Texas, California Public Employees’ Retirement System, Canada Pension Plan Investment Board, Kuwait Investment Authority, Los Angeles City Employees’ Retirement System, Oregon State Treasury, Louisiana State Employees’ Retirement System, San Francisco Employees’ Retirement System, Portfolio Advisors LLC, Santa Barbara County Employees’ Retirement System, San Bernardino County Employees’ Retirement Association, New Mexico Educational Retirement Board and Los Angeles Fire and Police Pensions."
read more: Dow Jones Private Equity Analyst
1/21/2009
GE will be first tenant of Masdar
The National states, "General Electric (GE), the US-based technology services conglomerate, will be the first tenant of Masdar’s carbon-free city being built on the outskirts of Abu Dhabi. The partnership, announced by Masdar yesterday, follows the signing last July of a strategic partnership between GE and Mubadala, the investment company behind Masdar."
read more: The National
1/20/2009
According to Singapore's Finance Minister: Temasek, GIC outperformed equity markets
'Their overall value has fallen by less than the decline in global equity markets, as they maintain diversified portfolios and had taken precautionary actions early in the crisis to reduce their exposures to the equity markets,' Tharman Shanmugaratnam said in a reply to a parliamentary question, referring to a 42 percent fall in 2008 in the MSCI World equities index."
read more: Reuters
1/17/2009
Kuwait's Finance Minister says KIA not to cut foreign investments
Reuters reports that, "Kuwait's sovereign wealth fund does not plan to reduce its overseas investments despite launching a 1.5 billion dinar ($5.17 billion) fund to invest in local stock markets, the finance minister said.
'We won't lower foreign investment,' Mustapha al-Shamali told Reuters on the sidelines of an Arab economic meeting in Kuwait, when asked whether the Kuwait Investment Authority would scale back its foreign activities.
KIA, which manages the Gulf state's massive oil-generated assets, has invested around the globe and last year bought into U.S. banks such as Citigroup Inc.
In December, it launched on behalf of the government a fund to stabilise the second-largest Arab bourse .KWSE, which fell 38 percent last year during a regional stock market rout triggered by the global financial crisis."
read more: Reuters
1/15/2009
Notable Direct Purchases in Real Estate - SWF
Below are some notable transactions by SWFs making direct purchases.
1/14/2009
Alaska Permanent Fund hires State Street for passive global mandate
The Alaska Permanent Fund Corporation Board of Trustees hired State Street Global Asset Managers for a $700 million passive global mandate on January 14. The mandate was previously managed by UBS Global Managers. During the teleconferenced meeting, the Board also took the following action:
Amended the APFC’s equity investments resolution to include the Morgan Stanley Capital World Index as the benchmark for global passive managers.
Transferred the distressed debt portfolio managed by Crestline Investors, Inc. from domestic fixed income to the absolute return strategies asset class. The Trustees determined that the portfolio’s characteristics made it more naturally fit in the alternative assets portfolio.
Changed the short-term interest rate proxy for CDs purchased through APFC’s Alaska CD program from U.S. Treasury Bills to the short-term rate published by the Federal Home Loan Bank of Seattle. This ensures that the Permanent Fund is receiving fair compensation for its investment, while providing liquidity to the Alaskan economy through the state’s banking system.
Due to strong demand from our large institutional customers:
1/11/2009
Libya Wealth Fund To Disclose Details On Invest - Fund Head
The State-run Libyan Investment Authority will disclose details about its investment strategy in coming months to allay concerns in the U.S. and European about its intentions, the fund's Executive Director Mohamed Layas said Sunday.
The Libyan state investment vehicle, or sovereign wealth fund, will also open a London office this year after months of consideration and is eyeing investments in some distressed banking and real estate assets in the U.S. and Europe, Layas said, declining to provide specifics. "We will soon publish a report soon about our investments and intentions. We will show our purpose to be transparent and that we are a long-term investor," Layas told Dow Jones Newswires in an interview by telephone from the Libyan capital, Tripoli. He declined to provide any details about what type of investment principles the LIA will commit to and said the report could be disclosed before spring.
By laying out its investment philosophy in some form, the LIA wants to assure lawmakers in foreign countries its intentions are purely commercial and not for political advantage, said Layas, a former chairman of the Libyan Arab Foreign Bank.
"Any deals we pursue will be about commerce only," he said.
The LIA currently has about $70 billion on hand to deploy, Layas said, up from around $40 billion when the fund was launched in late 2007 with the aim of investing big chunks of the North African oil-rich nation's growing cash pile from record crude prices into overseas assets. Government-controlled investment funds have snapped up foreign companies in recent years, sparking calls in the U.S. and Europe for more transparency about the funds' purposes.
read more: Easy Bourse
1/8/2009
Abu Dhabi Investment Authority Appoints Bill Schwab as Global Head of Real Estate
It states: "The Abu Dhabi Investment Authority said today that it has appointed Bill Schwab as Global Head of Real Estate, based in Abu Dhabi, with immediate effect.
Mr. Schwab, 56, will be responsible for leading a dedicated team of professionals in managing and implementing ADIA’s global investment strategy in the real estate sector. He joins from J.P. Morgan, where he was a Managing Director in the European Real Estate Finance division with responsibility for the origination and execution of real estate transactions. Prior to this, Mr. Schwab spent 5 years at Deutsche Bank as a Director in the Real Estate, Capital Structure & Underwriting department. He also previously served as Chief Lending Officer in the Real Estate division at Goldman Sachs and held a number of senior posts within the real estate and construction industries.
Commenting on the appointment, Majed Al Romaithi, Executive Director for Real Estate at ADIA, said: 'Bill is a highly regarded professional with broad knowledge and experience across all aspects of the real estate business and we are delighted to welcome him to the ADIA team. He will play an important role in guiding ADIA’s investment strategy in this exciting and constantly evolving sector.'
Mr. Schwab said: 'ADIA has an excellent reputation as an established and sophisticated real estate investor with a focus on sustainable, long term returns. I am very excited to be working with such a high caliber team and contributing to ADIA’s continued success in the real estate space.'"
read more: ADIA Press Release
1/7/2009
US$ 4 billion economic stimulus plan for Chile
It states: "The Chilean government unveiled an ambitious countercyclical fiscal strategy to stimulate employment and growth in 2009. The plan involves over US$4 billion, equivalent to 2.8% of GDP. The stimulus plan announced by President Michelle Bachelet aims at securing economic growth between 2 and 3% in 2009 and encouraging employment. The government estimates that the plan could create over 100 thousand jobs. The package involves direct support for low-income families, additional public investment in infrastructure, tax cuts and other incentives for private investment, enhanced access to financing by small and medium companies, additional funds for labor retraining and a new hiring incentive, among other initiatives. The changes will be contained in a bill to be sent to Congress this week, and in several administrative measures that do not require congressional approval.
The plan contemplates an increase in public sector outlays of 1% of GDP (US$1,485 million), so that the 2009 real increase in public expenditure will reach 10,7%. The fiscal spending increase has as a counterpart an increase in structural fiscal income (owing to the depreciation of the Chilean peso, which raises the value of fiscal income denominated in dollars) and a temporary reduction in 2009 of the structural fiscal surplus to 0% of GDP from 0.5%. The plan also involves a temporary reduction in tax revenues of US$1,455 million, or 1% of GDP in 2009. Because they are transitory, the tax reductions do not affect structural, long term, fiscal revenues. Additionally, the government will allocate resources to capitalize Codelco and to fund CORFO financing initiatives. These items do not constitute additional spending, but rather below-the-line acquisitions of financial assets.
This fiscal strategy will imply an effective fiscal deficit of 2.9% of GDP in 2009. The government reaffirmed its strict adherence to the structural fiscal balance approach, which has strengthened public finances and allowed for the application of a strongly counter-cyclical fiscal policy. The plan will be financed with resources from the Economic and Social Stabilization Fund and the issuance of bonds authorized by the 2009 Budget Law."
read more: Chile - Ministry of Finance
1/7/2009
Committee on Foreign Investment in the United States (CFIUS) Clears Path for Creation of “The Foundry Company”
According to the Press Release by AMD, "AMD and the Advanced Technology Investment Company (ATIC) announced today that they had obtained clearance from the Committee on Foreign Investment in the United States ("CFIUS") regarding the creation of The Foundry Company, their leading-edge semiconductor manufacturing joint venture. CFIUS also has determined that the proposed additional investment in AMD by Mubadala is not a covered transaction subject to CFIUS review."
read more: AMD Press Release
1/6/2009
Dow Chemical Considers Legal Options Against Kuwait
According to the Wall Street Journal, "Dow Chemical Co. said it would pursue legal, operational and financial avenues to enforce its rights under a failed $17.4 billion joint-venture deal with Kuwait's Petrochemical Industries Inc.
At the same time, Dow said that it has been approached by other potential business partners and that it has been in discussions regarding some of the operations that were slated to be part of the Kuwait deal, such as the basic plastics business that was its centerpiece.
The Midland, Mich., chemicals giant was notified Dec. 31 that Petrochemical Industries was scuttling their K-Dow venture just days before its launch."
read more: Wall Street Journal
1/4/2009
Kuwait bourse fund targets long-term investments -KIA
Reuters reports that, "a Kuwait government fund launched to stabilise the Gulf state's bourse was seeking long-term investments in stocks, the managing director of the Kuwait Investment Authority (KIA) said on Sunday.
In November, Kuwait asked its sovereign wealth fund KIA to set up the fund to shore up the second largest Arab bourse , which fell 38 percent last year during a regional stock market rout triggered by the global financial crisis.
The fund, which started operations on Dec. 24, was seeking long-term investments, Bader al-Saad said at a news conference on Sunday.
Kuwaiti Minister of Finance Mustapha al-Shamali said last month the fund would invest least 1.5 billion dinars ($5.42 billion)."
read more: Reuters
1/2/2009
Norges Bank will not purchase foreign exchange for the Government Pension Fund – Global in January.
The Norwegian SWF is administered by Norges Bank Investment Management (NBIM), a division of the Norwegian Central Bank.
According to the Press Release by Norges Bank, "the Fund’s foreign exchange requirements are partly met by the state’s direct financial interest in petroleum activities (SDFI) and partly by Norges Bank’s purchases in the market.
The Ministry of Finance determines the size of the monthly allocations to the Fund. Norges Bank’s purchases of foreign exchange are equal to the difference between the allocations and the SDFI’s estimated foreign exchange revenues. Adjustments are made for any revisions of estimates for the previous month. As a result, the daily purchases may vary from one month to the next. The daily foreign exchange purchases are determined for a period of one month at a time and are published on the last business day of the preceding month."
read more: Norges Bank
1/2/2009
SR720 Million Deal Signed to Produce Seamless Pipes in Saudi Arabia
A long-term SR720 million financing agreement was signed here by Jubail Energy Services Company (JESCO), a subsidiary of the Industrialization and Energy Services Company (TAQA), and the Public Investment Fund (PIF), a state-owned organisation established by a royal decree to provide finance to commercial ventures.
The funds will be used to finance part of the seamless pipe manufacturing facility being built in the industrial city of Jubail.
Hamad bin Mohammed Al Kanhal, JESCO’s board member, who signed the agreement on behalf of JESCO’s President Khalil Al Gannas, in Riyadh said that the company owns and develops all technical, financial and human capabilities required to secure a leadership position in this specialised global manufacturing sector. He added that TAQA owns 51 percent of JESCO, while the balance of the company’s share capital is owned by Saudi and foreign investors.
read more: Khaleej Times
12/29/2008
Emirates Investment Authority launches website
Profile update: It is a fund that is mandated to manage the sovereign wealth of the United Arab Emirates federal government. Established in November 2007 by Emiri decree, the Emirates Investment Authority (EIA) is the first federal sovereign wealth fund for all seven states comprising the United Arab Emirates (Abu Dhabi, Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah and Umm al-Quwain).
The EIA is the sole entity responsible for the future stewardship of federal government stakes in over 30 corporations across the GCC, including Etisalat, Du, Gulf International Bank, United Arab Shipping Company and Gulf Investment Corporation.
The objective of the EIA is to achieve attractive financial returns and diversify the government's asset exposure by cultivating sovereign funding arrangements in tandem with first-class investment opportunities in the public and private markets of the GCC and overseas.
read more: EIA Profile
12/29/2008
Dubai Investments open to selling 40% in units
"Dubai Investments (DI) is willing to sell up to 40 per cent stakes in any of its subsidiaries when the market situation improves, a top official said. He added that the global economic crisis is not expected to have a significant impact on future cash flows.
'We are open to selling stakes in any of our subsidiaries and possible buyers could include sovereign wealth funds,' DI Chief Executive Officer Khaled Kalban told Emirates Business.
DI has also put all plans for launching initial public offerings (IPOs) for any of its subsidiaries on hold, owing to market conditions. The company, with 46 subsidiaries, had said it would launch an IPO for M'sharie, its private equity arm, within 12 to 18 months, but has put the plans on hold."
read more: Emirates Business
12/28/2008
Dow Chemical Receives Notification of Kuwait Decision to Cancel K-Dow Partnership
"Today, The Dow Chemical Company has been verbally informed by our partners at the Kuwait Petroleum Corporation (KPC) and Petrochemicals Industries Company (PIC) about a decision made by the Kuwait Supreme Petroleum Council (SPC), to reverse its prior approval of the agreement between Dow and PIC to enter into K-Dow Petrochemicals, a planned 50-50 joint venture company. The partners have informed us that there will be official written notification of the decision within the next few days.
Dow is extremely disappointed with the decision, and is in the process of evaluating its options pursuant to the Joint Venture Formation Agreement. While disappointed in this outcome, Dow remains committed to its Middle East Strategy. "
read more: DOW Chemical
12/28/2008
Vietnamese Ministry of Finance puts SOE Reform & Equitization Support Fund under SCIC’s management
SCIC reports that,"The Ministry of Finance (MOF) officially transferred management of the SOE Reform & Equitization Support Fund (the Fund) to the State Capital Investment Corporation (SCIC), pursuant to Decision 113/2008/QĐ-TTg dated 18 August 2008 of the Prime Minister."
read more: SCIC
12/26/2008
Brazil president signs sovereign wealth fund law - Sovereign Wealth Fund of Brazil
Brazilian President Luiz Inacio Lula da Silva has signed a law creating a sovereign wealth fund to buffer the country from the global financial crisis and help Brazilian companies boost trade and expand overseas. The presidential press office said in a statement that Silva signed the law on Wednesday and also inked a provisional measure endowing the fund with the equivalent of nearly $6 billion. The statement provided no details.
The provisional measure must still be submitted to Congress for its approval. Earlier this year, Finance Minister Guido Mantega said money for the fund would come from the federal government's primary budget surplus expected to come in at 3.8 percent of gross domestic product.
read more: The Associated Press
12/23/2008
Poll Results (October 2008 - December 2008)
Which Wall Street Firm will next be bailed out by foreign investors?
Morgan Stanley (62) Goldman Sachs (49) JP Morgan Chase (26) Other (17) Bank of America (16)
Out of 170 Total Votes, from October 2008 - December 23, 2008
12/22/2008
Wealth fund may be Madoff victim - UPDATE
New sources say, "Abu Dhabi Investment Authority, the world's largest sovereign wealth fund, said it had no direct investments in a firm managed by Bernard Madoff, a newspaper reported on Monday. ADIA was denying a New York Times report which said the fund had 'entrusted some $400 million' in a firm of the U.S. fund manager accused of running a $50 billion fraud. ADIA said it had invested $132 million three years ago in a fund that had partial investment in Madoff's Investment Securities, which could have suffered some losses, al-Ittihad newspaper reported. 'ADIA affirmed that is has not invested directly in Investment Securities," the Arabic-language daily reported.'"
read more: Reuters
The Abu Dhabi Investment Authority (Adia), the world’s largest sovereign wealth fund, may also have lost money in the US$50 billion (Dh183.6bn) ‘ponzi’ fraud scheme carried out by New York investment manager Bernard Madoff.
In 2005, Adia indirectly invested around $400m with Mr Madoff through a fund called Fairfield Sentry Ltd, according to a report in the New York Times on Saturday, which cited a description of Fairfield’s investors supplied to a prospective client. Adia has since withdrawn portions of its original investment from Fairfield Sentry twice, but may still have had some $132 million in the fund as of last year. Fairfield Sentry is part of Fairfield Greenwich Group, which is understood to have invested more than half of its assets under management with Mr Madoff’s investment company.
read more: The National
12/18/2008
Peugeot’s Michel Said to Be Picked by Sarkozy for Wealth Fund
Bloomberg reports that, "Gilles Michel, a member of the management committee of PSA Peugeot Citroen, was picked by French President Nicolas Sarkozy to head the country’s 20 billion-euro ($29 billion) sovereign wealth fund, three people with direct knowledge of the matter said.
Sarkozy chose Michel, 52, from two nominees put to him by the fund’s board, which may vote on the appointment tomorrow, said the people, who requested anonymity because the information isn’t public.
Sarkozy said on Nov. 20 that the government and the state- owned lender Caisse des Depots et Consignations will jointly raise 6 billion euros for the fund, which is being created to prevent the takeover of strategic French companies by foreign predators. The fund will also help companies to cope with the effects of the credit freeze."
read more: Bloomberg
12/17/2008
Norway - Government Pension Fund – Global seeks to block Warren Buffett on Constellation Deal
Reuters states, "Norway's sovereign wealth fund on Wednesday threw a spanner into U.S. investor Warren Buffett's deal to take over Constellation Energy, seeking to buy time to evaluate a rival bid by Electricite de France.
Norway's $339 billion oil fund said it filed a law suit in a Maryland court to delay a Dec. 23 Constellation shareholders' meeting due to vote on a takeover by MidAmerican Energy Company, a unit of Buffett's Berkshire Hathaway Inc.
'In our opinion, the MidAmerican agreement undervalues Constellation, and we expect the board to work for a solution that offers the highest value,' said Anne Kvam, head of corporate governance at the fund.
MidAmerican's $4.7 billion takeover in September was backed by Constellation's board. However in early December Electricite de France said it would pay $4.5 billion for half of Constellation's nuclear assets and give the U.S. company the option to sell it up to $2 billion more of its non-nuclear assets.
Norway's fund said it holds 4.8 percent in Constellation and likes to take an active role in the corporate governance of the companies in its portfolio. It is regarded as the world's most transparent sovereign wealth fund and is the second largest after the United Arab Emirates' fund."
read more: Reuters
12/15/2008
CBRE reports that SWFs expected to invest US$725 Billion in Commercial Real Estate Globally by 2015
The report states, "Sovereign Wealth Funds (SWFs) are expected to become one of the most significant investors in the world’s commercial property markets, potentially investing as much as US$725 billion over the next seven years, according to a new global report from CB Richard Ellis Group, Inc.
Although more than half of the SWFs are believed to already hold direct commercial real estate investments, allocations to the sector are expected to rise substantially. The potential impact on the global real estate market is significant.
Ray Torto, Chief Global Economist at CB Richard Ellis, explained: 'Given that the real estate sector’s investment characteristics – current income combined with long-term appreciation -- closely match SWF requirements, we expect them to increase their weighting of commercial property to approximately 7% of their total assets. With nearly US$4 trillion of total assets currently under SWF control, a 7% allocation would mean worldwide commercial real estate investments totaling US$280 billion. To put this number in context, the entire U.S. institutional-grade property portfolio owned or managed by investment managers and plan sponsors is valued at approximately US$330 billion1 today.'
Mr Torto continued: 'Looking to the longer term, the SWFs’ potential for future property investment is even more significant. It has been estimated that the SWFs could reach total assets of US$12 trillion2 by 2015. A 7% allocation implies SWFs would make approximately US$725 billion3 of net property investments over the next seven years.'
The influence of SWFs is expected to be felt across the world. In order to achieve target allocations, SWFs will need to diversify future investment widely across geographies, sectors and investment vehicles. Thus far, SWF property investments have been largely concentrated in the U.S. and the Middle East.
'Although SWFs are likely to continue to focus on core real estate product in major markets, they will have to put capital to work in new geographies and emerging sectors. Favored future destinations are expected to include Japan, the U.K. and other countries with currencies that are not held in the SWF’s foreign reserves,' said Michael Haddock, Director EMEA Research, CB Richard Ellis.
Mr Haddock continued: 'However, SWFs will have to look to both the indirect investment market and the debt market to fully meet their objectives in the real estate sector. It is also very possible that we will see outright acquisitions of property companies – listed and unlisted – as a way of assembling a significant direct real estate portfolio rapidly as well as acquiring the property management infrastructure to go with it.'"
read more: CBRE Press Release
12/12/2008
NZ Superannuation Fund: Exclusion of Companies involved in manufacture of Cluster Munitions or Nuclear Explosive Devices
The Guardians of New Zealand Superannuation today announced that they were excluding from the New Zealand Superannuation Fund companies associated with the manufacture of cluster munitions and the manufacture or testing of nuclear explosive devices.
The Fund will divest from stocks in six companies involved in the manufacture of cluster munitions, one of which is also involved in the simulated testing of nuclear explosive devices. The Fund will divest from another company involved in simulated testing. The Fund does not, and has never, held shares in any company that manufactures nuclear explosive devices. The total value of the Fund's shares in these companies is approximately $37 million, or 0.3 percent of the Fund's portfolio. The table at the end of this document provides the full list of companies involved.
"Today's announcement follows the New Zealand Government joining with 93 other nations in signing an international treaty banning the production or use of cluster munitions, and a comprehensive review of the nuclear weapons issue. We will continue to review our portfolio through our specialist screening agencies to ensure our list of excluded companies remains up-to-date," said Guardians Chief Executive Officer Adrian Orr.
read more: New Zealand Superannuation Fund
12/12/2008
Terengganu looks to the future with RM10 Billion fund
Terengganu is a sultanate and constitutive state of Malaysia. The New Straits Times reports that, "Terengganu is setting up a RM10 billion 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. The king also said the state's wealth must be managed prudently and professionally so that its prosperity could be safeguarded. Yesterday, the state executive council endorsed the setting up of the TIA with Tuanku Mizan as chairman of the board of advisers. Other board members will be professionals. The TIA will operate as a sovereign wealth fund that invests and delivers long-term economic benefits and returns to its investors and Malaysia. It aims to initially raise up to RM10 billion that will be invested in Terengganu and the country. It will also have the mandate to invest globally and hopes to bring international partners to the state. The RM10 billion will be sourced from local and foreign capital markets with a proposal for the Federal Government to provide a government guarantee of up to RM5 billion and for the TIA to be declared a tax-exempt company. The funds will be secured against a portion of the state's oil revenues."
read more: New Straits Times
12/9/2008
Korea Investment Corporation Backs Merrill Lynch's CEO Thain After Loss
Bloomberg reports that, "Korea Investment Corp. said it still has faith in Merrill Lynch & Co. Chief Executive Officer John Thain after a stock rout that cut the value of its stake by $800 million and forced the firm's sale to Bank of America Corp.
'He was willing to change the company and Merrill needed a change,' Guan Ong, the $30 billion sovereign fund's chief investment officer, said yesterday in an interview in Seoul. 'We made the right decision because we believe in John Thain.'
Merrill's fifth-biggest shareholder joined Temasek Holdings Pte in endorsing Thain, who presided over 3,500 job cuts and engineered the firm's sale to Bank of America after replacing the ousted Stan O'Neal a year ago. The 53-year-old agreed to forgo a year-end bonus after the financial-market meltdown and bank bailouts stirred a public outcry over Wall Street pay."
read more: Bloomberg
12/8/2008
AMD, the Advanced Technology Investment Company and Mubadala Amend Transaction Agreements
"SUNNYVALE, Calif. -- December 8, 2008 --AMD (NYSE: AMD), the Advanced Technology Investment Company (ATIC) and Mubadala Development Company today announced amendments to the October 6, 2008 transaction agreements for the creation of a leading-edge semiconductor manufacturing joint venture, currently known as The Foundry Company. The transactions covered by the amended agreements are expected to close at the beginning of 2009.
The amendments to the terms between AMD and Mubadala provide for the following:
Mubadala will purchase 58 million shares of AMD’s common stock at a revised purchase price per share equal to the lower of (i) the average closing price per share of AMD’s common stock on the NYSE during the 20 trading days immediately prior to and including December 12, 2008 or (ii) the average closing price per share of AMD’s common stock on the NYSE during the 20 trading days immediately prior to the closing date of the transaction.
AMD will issue to Mubadala an additional 5 million warrants to purchase AMD stock, for a total of 35 million warrants.
The amendments to the terms between AMD and ATIC provide for the following:
The enterprise value of the manufacturing assets to be contributed by AMD to The Foundry Company will be reduced from a multiplier of 1.13x to 0.85x of the net book value of the assets. As a result, AMD will own approximately 34.2 percent and ATIC will own approximately 65.8 percent of “The Foundry Company’s” fully-converted common stock. AMD and ATIC will each have equal voting rights at the close of the transaction.
The net asset valuation multiple on future capital calls of The Foundry Company will be reduced from 1.1x to 0.9x.
All other material economic terms of the transaction agreements remain unchanged. ATIC will still invest $2.1 billion to purchase its stake in “The Foundry Company”, of which it will invest $1.4 billion directly in the new entity and will pay $700 million to AMD."
read more: AMD Corporate Site
12/8/2008
McLaren expect to lose a third of revenues
McLaren expect their revenues to fall by more than a third as a result of the global economic crisis, according to the Formula One team's boss and co-owner Ron Dennis. "Our budgets come from the advertising budgets of the companies that support us, and inevitably advertising budgets get slashed or, at least are significantly trimmed in times of economic strife," he told the Observer.
"We know we have to reduce our costs to cater for the inevitable downturn in income that is coming in 2010 and 2011," he added in an interview that the Sunday paper said took place before Honda announced on Friday that they were pulling out of the sport."We predict that our turnover will drop from 280 million pounds a year to as low as 175 million pounds a year," said Dennis. McLaren are 40 percent owned by Mercedes with 30 percent in the hands of Bahrain's state-owned Mumtalakat holding company and the remainder shared equally between Dennis and Saudi business partner Mansour Ojjeh.
read more: Reuters UK
12/6/2008
Kmg, Conocophillips, Mubadala Sign Agreement on Block N Shelf Project
Kazakh national oil and gas company KazMunayGas (KMG), ConocoPhillips and Energy & Industry Holding Co., a wholly owned subsidiary of UAE-based Mubadala Development Company, signed an agreement in Almaty on Friday on the principles of cooperation on the Block N shelf project.
The parties agreed that the project will be managed by a joint operating company, in which KMG will own 51% and the other two companies will own the remaining 49%. During the production period, KMG will be the sole owner of the operating company.
"In accordance with this agreement, KazMunayGas will transfer 24.5% stakes in the contract for the subsurface use to each ConocoPhillips and Mubadala," KMG President Kairgeldi Kabyldin told Interfax following the signing ceremony.
"This field has some 630 million tonnes of geological resources with recoverable resources estimated at about 270 million tonnes. Under the agreement, our foreign partners will pay a signing bonus of $100 million," he said.
read more: iStockAnalyst
12/5/2008
British Land revives sale of stake in flagship retail centre
FT reports that, "British Land has reignited talks to sell a large stake in its flagship £1.4bn ($2.3bn) Meadowhall shopping centre in the north of England. A London-listed property fund, backed by an Abu Dhabi sovereign wealth fund, is seen as frontrunner to secure the deal. The shopping centre in Sheffield, South Yorkshire, comprises almost a tenth of British Land's property portfolio. Meadowhall was valued at £1.4bn at the end of September according to the UK property company's most recent set of accounts, representing a net equivalent yield of 5.7 per cent. British Land is in talks to sell about half of the shopping centre to London & Stamford, a listed property opportunity fund launched at the start of the year by investors Raymond Mould and Patrick Vaughan.
London & Stamford has set up Cavendish, a joint venture with an unnamed Abu Dhabi sovereign wealth fund, to co-invest in sizeable transactions, and the majority of the equity would likely be sourced from the Middle East if a deal were to go ahead. There is competition from other interested buyers, however, with US opportunity fund Carlyle among several that are understood to have tabled offers should the deal not be taken forward with London & Stamford."
read more: FT
12/4/2008
CIC more skeptical on US Financial Firms
Reuters reports that, "China Investment Corporation, the sovereign wealth fund that has incurred steep paper losses on its stakes in U.S. financial firms, said on Wednesday it is "not brave enough" to invest in foreign financial firms and lacks confidence in the shifting U.S. financial regulatory situation.
'It's changing every week. How can I be confident?,' Lou Jiwei, chairman of CIC, said during the Clinton Global Initiative event in Hong Kong, referring to U.S. government efforts to rescue the devastated financial services sector. He said the fund continued to make investments overseas, and was looking to diversify geographically to include emerging economies. 'We are still actively making investments outside, and we will continue our investments,' he said during a panel discussion. Lou made his remarks just ahead of talks scheduled in Beijing between U.S. Treasury Secretary Henry Paulson and Chinese officials in the fifth round of a so-called strategic economic dialogue that Paulson initiated in 2006. Lou said the world should not look to China to resolve the financial crisis."
read more: Reuters
11/28/2008
Available Now - Special Report - Barclays seeks Sovereign Wealth
As giant financial institutions continue to seek new capital, many turn to sovereign wealth investors. Institutions like Morgan Stanley, UBS, and Citigroup have received capital injections early in 2008. This special report was written about Barclays Plc activities with sovereign investors in recent months leading to November 2008. The report examines certain relationships between the Bank and its investors as well as the background of the new offering. It also entails in detail the capital raising, investors, and other related material to the capital injection.
Purchase: Barclays seeks Sovereign Wealth
11/28/2008
France's Caisse des Dépôts - Creation of the Strategic Investment Fund (SIF)
"Paris, 20 November 2008 – The President of the French Republic announced this morning in Montrichard the creation of a Strategic Investment Fund (SIF), which is intended to boost the equity and to stabilise the capital of French businesses. He has decided to entrust the management of this fund to Caisse des Dépôts.
This mission is consistent with Caisse des Dépôts’ identity as a long-term investor that was affirmed in its Elan 2020 strategic plan and enshrined in the recent French law on modernisation of the economy. It accords with Caisse des Dépôts’ calling and experience as a well-informed and wise investor in the service of the public interest. It also extends the mission of management of the France Investment programme entrusted to Caisse des Dépôts via its subsidiary CDC Entreprises. It should be noted that Caisse des Dépôts contributes two-thirds of the total amount of this support programme for SMEs, with a commitment of €2.2 billion over six years.
The setting-up of the SIF is going to enable the commitment to businesses of the Caisse des Dépôts
Group to be boosted by allocating fresh resources to it. The SIF will be a French public limited company (société anonyme), a subsidiary of Caisse des Dépôts, and controlled by it, whose accounts will be consolidated with those of Caisse des Dépôts. It will be endowed, at the start, with 20 billion Euros contributed at par by Caisse des Dépôts from its equity (general section) and by the French State: 14 billion Euros in securities and 6 billion Euros in cash. It will not receive support from the Savings Funds managed separately by Caisse des Dépôts, the uses of which are fixed by law and are allocated in priority to the financing of social housing and urban policy.
The President of the French Republic set out this morning the fund’s guidelines. The fund will be investing in equity in order to promote the development of businesses, whether these are small or medium-sized enterprises. It will participate in the stabilisation of the capital of certain large French enterprises. It will act as a well-informed and wise investor in the service of the public interest, with a long-term horizon, and in accordance with tailored investment policies that will draw inspiration from those of the Caisse des Dépôts Group. Caisse des Dépôts’ Chief Executive Officer will be the Chairman of the SIF’s Board of Directors. The SIF will also be assisted by a policy committee, involving social partners, business leaders and economists in elaborating its main strategic aims. This committee will be chaired by Mr Jean-François Dehecq, the Chairman of Sanofi. The SIF’s investment committee will be chaired by Mrs Patricia Barbizet, the chief executive officer of Artemis. Like the other subsidiaries of Caisse des Dépôts, the SIF will be carrying on its activities under the oversight of the Supervisory Board. It will be submitting to it in particular its strategic policies and its annual management report.
Michel Bouvard, the Chairman of Supervisory Board of Caisse des Dépôts, and Augustin de Romanet, the Chief Executive Officer, are very pleased with the trust thus shown by the President of the French Republic in Caisse des Dépôts and its teams. They will take all the necessary steps for the SIF to be set
up immediately."
read more: Caisse des Dépôts
11/25/2008
Barclays Shareholders Back $10.5 Billion Share Sale mainly to funds from Qatar and Abu Dhabi
Bloomberg reports that, "Barclays Plc won shareholder support to raise 7 billion pounds ($10.5 billion) without surrendering control of its lending or dividends, Chairman Marcus Agius said. The bank, the second largest in the U.K., got more than 85 percent of shareholders to vote in favor of four resolutions calling for the sale of stock mainly to funds from Qatar and Abu Dhabi. Barclays, which is bypassing ordinary shareholders and the U.K.’s rescue plan as it complies with new capital requirements, rose 10 percent in London trading, the most since Oct. 14.
Barclays made the extremely difficult to avoid government restrictions on when it pays dividend, where it lends and the risks it takes, the company said today in a statement. 'We’re in the firing line,' said Agius, who is up for re-election in April and started today’s vote as investors were still shouting questions. Royal Bank of Scotland Group Plc and two other U.K. banks agreed to raise 37 billion pounds in the U.K. bailout. 'They have made it very clear that they think the government will lean on banks in which it has stakes for the interest of U.K. taxpayers,' said Simon Willis, a London-based analyst at NCB Stockbrokers Ltd. who has a reduce rating on Barclays. “That may well have a bearing on profitability.'"
read more: Bloomberg
11/25/2008
Occidental Petroleum Corporation and Mubadala Development Company sign EPSA to develop gas fields in Oman
Occidental Petroleum Corporation (Oxy) and Mubadala Development Company of Abu Dhabi (Mubadala) today announced the signing of an Exploration and Production Sharing Agreement ("EPSA") with the Ministry of Oil and Gas in the Sultanate of Oman. Under the terms of the EPSA the parties will develop four existing gas fields and explore for potential new discoveries in a newly formed contract area ("Habiba" - Block 62) in Northern Oman. The 20 year agreement covers a 2,269 square kilometre area.
Oxy will serve as operator under the EPSA and hold a 48-percent interest, with Mubadala Development Company holding a 32-percent interest and the Oman Oil Company holding the remaining 20 percent.
"We are pleased to expand upon our existing relationship with Oman and look forward to working with our partners to help ensure that future supplies of natural gas will be available to fuel Oman's economic growth," said Dr. Ray R. Irani, Chairman and Chief Executive Officer of Occidental. "Signing this EPSA is another important step in the implementation of our growth strategy within the region. The development of the substantial natural gas resources contained within the contract area will create significant value for the people of Oman and for our shareholders."
read more: Zawya
11/24/2008
Standard Chartered Plc May Lose Right to Print Hong Kong Money
Bloomberg reports that, "Standard Chartered Plc may lose its right to issue Hong Kong bank notes if a Singapore-owned company raises its stake in the lender above 20 percent through a rights offer, Hong Kong’s de facto central bank said.
'We don’t wish a foreign government to have a large influence over our note-issuing banks,' Joseph Yam, chief executive of the Hong Kong Monetary Authority, told reporters in Beijing today. His comments were broadcast on television.
Singapore’s Temasek Holdings Pte, the biggest shareholder in Standard Chartered, may raise its stake to as much as 22 percent from 19 percent as the company is acting as underwriter for part of the bank’s 1.8 billion pounds ($2.7 billion) rights offering. Lenders more than 20 percent owned by overseas governments are barred from issuing bank notes in Hong Kong.
This issue 'is currently in the realm of hypothesis and in any case, it will need the necessary regulatory approvals,' Standard Chartered’s London-based spokesman Arijit De said by phone today.
Yam also said that the rights offer was unlikely to result in a foreign government owning more than 20 percent of the bank. 'We are aware of and respect HKMA’s regulations,' Temasek said in an e-mailed statement, without elaboration.Standard Chartered, based in London, announced the offer today to bolster its finances."
read more: Bloomberg
11/23/2008
Qatar, Kuwait funds eye Warsaw exchange stake
Gulf Times reports that "Poland will probably sell shares of the Warsaw Stock Exchange directly to selected investors from the Middle East, scrapping earlier plans for an initial public offering as market turmoil continues. Poland, which holds 98.8% of the exchange, may sell a stake in a private deal next year, after investors including the Kuwait Investment Agency and Qatar Investment Authority expressed interest in “large’’ stakes, Maciej Wewior, a spokesman for the Treasury Ministry, said by phone yesterday. The ministry is waiting for a report from its advisers and may decide on the form of sale in the next couple of weeks, Wewior said, declining to specify the size of the stake to be sold or the timing of the transaction. Poland previously planned to sell 25% to 35% of the bourse in an IPO, and as much as 36% to institutional investors."
read more: Gulf Times
11/22/2008
GE in Talks With Four Asian Sovereign Wealth Funds
General Electric Co., down 61 percent this year in New York, is seeking funds from China Investment Corp., Government of Singapore Investment Corp. and at least two other sovereign-wealth funds. Talks are also being held with Temasek Holdings Pte of Singapore and China Safe Investments Ltd., Brussels-based spokeswoman Elma Peters said in a phone interview today. China Investment Corp. is the nation's $200 billion sovereign wealth fund.
Chief Executive Officer Jeffrey Immelt has lowered his 2008 profit target twice and last month he raised an additional $3 billion in the sale of preferred shares to investor Warren Buffett's Berkshire Hathaway Inc. Asian talks follow an $8 billion venture with Abu Dhabi's Mubadala Development Co. as GE taps infrastructure spending outside the U.S., where a recession is deepening. Getting partners to become shareholders has the added advantage of establishing a more stable investor base.
read more: Bloomberg
11/21/2008
Citigroup meets with key middle east investors
ADIA had $7.5 billion injected into Citigroup earlier this year. According to the NY Times, "in a bid to calm nerves, Citigroup officials are meeting with other large shareholders. Last week, Citigroup’s chairman, Winfried Bischoff, traveled to Dubai and met with Sheik Ahmed bin Zayed al-Nahyan, the director of the Abu Dhabi Investment Authority, according to two executives briefed on the situation."
read more: NY Times
CFIUS Reform: Final Regulations Issued on November 14, 2008
"The U.S. Treasury Department, on behalf of the Committee on Foreign Investment in the United States (CFIUS), issued final regulations governing CFIUS on November 14, 2008. The regulations implement Section 721 of the Defense Production Act of 1950, as amended by the Foreign Investment and National Security Act of 2007 (Section 721). The regulations also codify improvements to the CFIUS process informed by seventeen years of practice. Issued in proposed form on April 21, 2008, the final regulations reflect CFIUS’s careful consideration of all comments received during the public comment period, as described in the discussion that precedes the regulatory text. By increasing clarity and transparency and ensuring that the CFIUS process is efficient, the regulations reinforce the United States’ longstanding commitment to open investment."
Regulations Clarify What Constitutes a Covered Transaction:
Only “covered transactions” are subject to CFIUS review under Section 721. Covered transaction: Any transaction proposed or pending after August 23, 1988, by or with any foreign person, which could result in control of a U.S. business by a foreign person. Greenfield investment: Greenfield, or start-up investment, is not covered. Asset acquisition: Not a covered transaction if the assets acquired by a foreign person do not constitute a U.S. business.Long-term lease: May be a covered transaction only if a foreign lessee makes substantially all business decisions concerning operation of a leased U.S. business, as if it were the owner. Lending transaction: Not a covered transaction unless the foreign person acquires financial or governance rights characteristic of an equity investment, but not of a loan. Imminent default giving a foreign person actual control of collateral that constitutes a U.S. business is a covered transaction – but lenders in the ordinary course may qualify for an exception. Incremental acquisition: After CFIUS concludes action on a covered transaction, the foreign person’s acquisition of additional interest in a U.S. business is not a new covered transaction.
CIC Resumes Talks to Buy Stake in Fortescue, Morning Post Says
China Investment Corp., the country's $200 billion sovereign wealth fund, has restarted talks to acquire a stake in Australia's Fortescue Metals Group Ltd., the South China Morning Post said, citing people it didn't identify.
CIC may bring in Baosteel Group Corp. and China Shenhua Energy Co. as partners to invest in the iron ore producer, the newspaper reported today. The sovereign wealth fund and Fortescue both declined to comment, while Baosteel and China Shenhua were unavailable for comment, the Morning Post said.
read more: Bloomberg
11/15/2008
For some SWFs Real Estate is still a good investment: Qatar's Sovereign Fund to Make More Real Estate Deals in 2009
According to Bloomberg, "Qatar Investment Authority, the country's $60 billion sovereign wealth fund, plans to make more real estate acquisitions in 2009 as global prices decline and investors sell assets.
'We are looking for prime properties in major cities at distressed prices,' said Navid Chamdia, the authority's head of real estate, in an interview at the Real Estate Investment World conference in Tokyo. 'We will continue to invest in attractive assets we are comfortable with.'
Real estate values are tumbling in New York, London and Tokyo as the global credit crisis has roiled lending and sidelined buyers. New York is poised to have its worst year since 2004 for commercial real estate transactions with deals plunging 61 percent so far. That's created opportunities for the Qatari fund to buy real estate more cheaply and to buy positions in real estate investment funds at a discount from investors and private equity funds, Chamdia said.
The Qatar Investment Authority has been investing in property in the past three years to diversify its holdings. The fund completed its first direct real estate investment in the U.S. in August, joining Boston Properties Inc. to buy the General Motors Building and three other New York towers for $3.95 billion. "
read more: Bloomberg
11/13/2008
Hedge fund firm GLG Partners said on Monday that it had been approached by a number of sovereign wealth funds
According to Reuters, "hedge fund firm GLG Partners said on Monday that it had been approached by a number of sovereign wealth funds or families interested in making an investment, as it reported lower net income and assets. Noam Gottesman, Chairman and co-Chief Executive, said on a call to analysts and journalists that the firm had been approached by 'a relatively good number of people', although he declined to give details of the approaches."
read more: Reuters
11/12/2008
ADIC & UBS plan new $1 billion infrastructure fund
According to Reuters, "a joint venture between Abu Dhabi Investment Company (ADIC) and UBS Global Asset Management plans new funds of up to $1 billion and will invest over $200 million in two Gulf infrastructure projects. The venture's CEO Mark Thompson said on Monday the ADIC-UBS venture will continue to invest in equity in the Middle East-North Africa (Mena) region despite the slowdown in projects due to the liquidity crunch."
read more: Reuters
11/10/2008
Dubai World eyes Russia investments despite crisis
Reuters reports that, "state-owned investor Dubai World, which is building the world's tallest tower, is looking at port, logistics and urban development investments in Russia and is not slowing any of its projects due to the global financial crisis, a senior official said on Monday.
'We are continuing with our projects without stopping or slowing down internationally or regionally,' Dubai World Secretary-General Farid Ahmed told reporters, adding the firm was not reconsidering the $40 million tower development. Ahmed said Dubai World had no problems funding its projects, but declined to elaborate on how the company would raise financing in the future given tighter global credit markets."
read more: Reuters
11/9/2008
US Must Work Closely with G20, Says Dubai Group
The United States will have to work closely with the G20 to help steer the world out of the financial crisis and to overhaul the international financial system, Soud Ba’alawy, executive chairman of Dubai Group, said on Saturday. “I think the American administration will have to work closely with the G20. America is still the super power, it represents 45 per cent of the world economy and what goes on in America has impact on the whole world. They will have to work to resolve this situation,” Ba’alawy told a Press briefing at the World Economic Forum’s inaugural Summit on the Global Agenda in Dubai. The G20, an informal grouping of the world’s top developed and developing economies, will hold a summit next week in Washington.
Ba’alawy said the crisis has shaken the world’s confidence on the global financial system. “My view is that today we are facing a situation where every belief that we had in the past 30 years has to be questioned. The system itself needs to be overhauled.” However, he said the global financial crisis has also thrown up some opportunities. “I think this is a big opportunity for the emerging markets. If emerging markets take this crisis seriously this is a great opportunity for emerging market countries and companies.” He said sovereign wealth funds should also take advantage of the situation. “Protectionism is natural,” Ba’alawy said. “Nothing will change. But there will be times like this when sovereign wealth funds will be welcomed big time.”
The World Economic Forum, in partnership with the Government of Dubai, opened the inaugural Summit on the Global Agenda in Dubai on Friday. The Summit is a unique and timely gathering of the world’s 700 most innovative and relevant minds — leaders from academia, business, government and civil society from around the world. Organised by the Forum’s Network of Global Agenda Councils, the Summit provides a platform to share ideas and collaboratively address some of the key issues on the global agenda — with the aim of laying out solutions to some of the most pressing issues. Mohamed A. El Erian, Managing Director of Pacific Investment Management Company, better known as PIMCO, said; “The election of Senator (Barack) Obama provides a unique opportunity for leadership both domestically and internationally. You need change and you have a very critical agent of change in the President Elect.”
read more: Khaleej Times
11/8/2008
RBS to court SWFs as possible investors
The Telegraph reports that "Stephen Hester, the new chief executive of Royal Bank of Scotland, is to court sovereign wealth funds about buying shares in the stricken lender as part of its £20bn capital-raising. Mr. Hester will meet representatives of a number of investment funds backed by foreign governments even as RBS prepares for the Treasury to become the bank's biggest, and possibly majority, shareholder. The meetings will take place as part of a roadshow for the fundraising, during which Mr. Hester will hold talks existing and potential new investors.
'We are going to be talking to anyone with money and they [the sovereign funds] have a lot of money,' said a person familiar with Mr. Hester's plans.
It was unclear last night which investment bodies he would meet, but people close to RBS dismissed any parallel between his prospective conversations and the investments made last month by Abu Dhabi-based and Qatari investors in Barclays. Mr. Hester declined to comment on talks with potential shareholders."
read more: The Telegraph
11/7/2008
Mubadala-GE fund eyes global market
Reports say that, "a joint venture fund launched by Mubadala and General Electric (GE) will be up and running within a year with a credit line of $50 billion (Dh183.5bn). Abu Dhabi Government-owned Mubadala and US-based GE signed an agreement to establish the 50-50 fund in New York last July. 'Basically the deal is that GE and Mubadala will each invest $4bn in a fund with up to $50bn of borrowing capability to invest in infrastructure projects around the world,' said GE Middle East and Africa General Manager Isam Moursy.
'It is not really restricted to the UAE or Middle East.'
He said Mubadala and GE, a multinational technology and services conglomerate that has been in the UAE since 1974, were currently obtaining certification to allow the fund to operate in the region."
read more: Emirates Business
11/6/2008
China Investment Corporation recruiting in gloomy London, New York
AFP reports that, "spotting an opening in the global fight for talent, China's ambitious financial institutions are planning recruiting trips to London and Wall Street on the wounded financial titans' home turf. Sovereign fund China Investment Corporation has begun a global search, multi-billion dollar Chinese-French fund Fortune SGAM plans interviews on Wall Street and Shanghai's government is headed to London and New York next month with job offers in hand. 'There are layoffs on Wall Street since the crisis but China's financial industry is still in its infancy and is hungry for talent,' Pei Changjiang, chief executive of the Fortune SGAM Fund, told AFP."
read more: AFP
11/5/2008
Temasek Holdings to Sell Indian Funds Management Unit
Bloomberg reports that, "Temasek Holdings Pte, Singapore's state-owned investment company, will sell its Indian mutual fund venture to Religare Enterprises Ltd. Lotus India Asset Management Co., a joint venture between Temasek's unit Fullerton Fund Management Group, and Sabre Capital Worldwide Inc., had assets under management of 54.58 billion rupees ($1.13 billion) as of October, according to data compiled by Bloomberg."
read more: Bloomberg
11/4/2008
Dubai World-MGM Mirage investment gets initial OK
Nevada gambling regulators have given preliminary approval for Dubai World to invest more than $6 billion in casino giant MGM Mirage Inc. The state Gaming Control Board gave its OK on Wednesday for several subsidiaries of the investment arm of the Persian Gulf state to proceed to Nevada Gaming Commission consideration later this month. Dubai World controls 9.4 percent of MGM Mirage's stock and owns 50 percent of the under-construction $9.1 billion CityCenter development on the Las Vegas Strip. Dubai World and MGM Mirage will have to be licensed for CityCenter sometime next year.
read more: International Herald Tribune
11/4/2008
Low Prices bad for Iran Oil Fund
Zawya reports that, "Iran's central bank warned on Monday that if oil prices fall under 60 dollars a barrel, the country's oil-dependent economy will struggle to survive the world financial crisis, the ISNA news agency reported. "If average price of oil stays at 60.6 dollars in the remaining five months of the current year (to March 2009), we can get through this crisis safe and sound," the bank's deputy for economic affairs, Ramin Pashaifam, was quoted as saying. Pashaifam said that with a minimum price of 60 dollars, Iran will still need to use savings from oil revenues to cover its budget needs. "In a case of 60 dollars per barrel for oil, no cash will remain in the Oil Stabilisation Fund," he said, referring to a fund which aims to guard against price fluctuations and to finance private sector projects."
read more: Zawya
11/4/2008
SOFAZ Executive Director takes part at the EITI Board meeting
Baku. Rashad Suleymanov, Chairman of the National EITI Committee, a member of the EITI Board and the Executive Director of the State Oil Fund of the Republic of Azerbaijan Shahmar Movsumov participated at the EITI Board meeting which was held on 29-30 October, 2008 in Athena.
Importance of EITI Resolution adopted by UN General Assembly was emphasized at the meeting and Azerbaijan’s initiative in submission of this Resolution to the UN General Assembly was appreciated.
It was also emphasized that Azerbaijan is the first country which officially launched the Validation process and it was praised by other Board members.
Preparation works for the International Conference which will be held on 16-18 February, 2009 in Doha were discussed at the meeting.
read more: APA-ECONOMICS
11/2/2008
Future Fund 'cannot bail out' mortgage funds
News Limited reports that, "Future Fund chairman David Murray says it is not the role of the $63 billion fund to bail out troubled mortgage-based investment funds. Some mortgage-based investment funds have had to be frozen after they experienced an exodus of funds, following the federal government's guarantee of bank deposits. Market-linked funds are not covered by the guarantee. Last week, Prime Minister Kevin Rudd said that larger and more liquid institutions - including the major banks - could provide liquidity to various market-linked investment vehicles within the financial system by buying their securities. The federal government had asked Mr Murray to assist Treasury in its talks with relevant financial institutions on the matter.
Asked if a sovereign wealth fund such as the Future Fund would invest in the mortgage funds to help them through the crisis, Mr Murray told Sky News' Sunday Business program that the Future Fund operated on commercial principles, not political principles."
read more: News Limited
11/2/2008
British Prime Minister Gordon Brown briefly talks about Sovereign Wealth Funds
The National reports, "the growth of Sovereign Wealth Funds (SWFs) is one of the most notable characteristics of the current wave of globalisation. The UK government welcomes the positive role that SWFs such as those in the UAE and Qatar have in the efficient allocation of capital and the benefit that they bring to the global economy by taking a long-term view of their investment decisions. To ensure a transparent environment that supports SWF investment, we have fully endorsed the lead taken by the IMF to develop a common set of principles. And, of course, the UK, with its history of open investment, will continue to be a natural place for SWFs to invest."
read more: The National
10/31/2008
Alleged Rumor: Social Media Network, Facebook might seek Dubai SWF Funding
According to Tech Crunch, "sources have told us that Facebook CFO Gideon Yu was in Dubai this week, possibly meeting with Dubai International Capital, exploring fundraising options. U.S. investors, including VCs and hedge funds, aren’t interested or aren’t able to invest at the valuation Facebook expects. That leaves Sovereign Wealth Funds as the only viable funding solution. And the window to get money from them may fast be closing, too."
read more: Tech Crunch
10/30/2008
Libyan funds talk to Telecom Italia and others on stakes
Reuters reports that, "Libyan funds are in talks to buy stakes in Telecom Italia and other Italian companies, the son of Libyan leader Muammar Gaddafi said on Thursday, spurring the telecoms company's shares. Libyan funds have just raised their stake in Italy's second-biggest bank, UniCredit, to 4.9 percent, becoming the number two shareholder in the bank, which is asking investors to help boost capital by 6.6 billion euros. Libya has also bought shares in oil company Eni."
read more: Reuters
10/29/2008
Temasek to invest up to $147 million in Pakistan NIB Bank
Singapore sovereign wealth fund Temasek Holdings has agreed to a further investment of up to 12 billion rupees (94 million pounds) in Pakistan's NIB Bank via a rights issue, NIB said.
Temasek, already NIB's largest shareholder with 63.15 percent, will participate in the Pakistani bank's 12 billion rupee rights issue and subscribe for shares not taken up by minority holders.
The rights issue will be offered to all existing shareholders at a ratio of 42.198 shares at par value, which is 10 rupees per share, for every 100 shares held as of November 19.
read more: Reuters UK
10/29/2008
Falling oil prices could slow down MENA Sovereign Wealth Fund Growth
As oil prices begin to buckle under the current market, it could slow down the cash inflows to oil-based sovereign wealth funds. According to The National, "Abu Dhabi National Oil Company (Adnoc) today told customers it will cut crude oil deliveries from several major oilfields as the UAE moved to comply with a reduced OPEC oil-production ceiling.
'There is some way to go for oil before it has an impact on the economy,' Hareb al Darmaki, the executive director of the Abu Dhabi Investment Authority, a sovereign wealth fund, told the same meeting."
read more: The National
10/28/2008
US Treasury - Kimmitt woos Gulf Sovereign Wealth Fund investors to ease turmoil
The AFP reports that, "US Deputy Treasury Secretary Robert Kimmitt called on oil-rich Gulf Arab countries on Tuesday to continue investing in the United States to help restore financial stability.
'We're looking for sovereign wealth funds (SWFs) to continue their over five-decade track record of investing on sound commercial bases,' Kimmitt said during a visit to the United Arab Emirates, his second stop on a five-nation tour of Gulf countries and Iraq.
'If they do that both in the US and elsewhere, I think this is how they can best contribute to the global economy,' he said. Kimmitt, who came to the UAE from Saudi Arabia, said he was meeting with both government officials and investors in the region."
read more: AFP
10/28/2008
Italy set to curb sovereign wealth funds
According to FT.com, "Italy’s centre-right government opposes sovereign wealth funds buying more than 5 per cent of individual Italian companies, Franco Frattini, foreign minister, said on Monday. Rome has set up a national interests committee to establish rules about the funds’ behaviour. A 5 per cent stake ceiling would make Italy one of the more restrictive markets for sovereign wealth funds among its European competitors."
read more: Financial Times
10/26/2008
Qatar Investment Authority comes to Barclays' aid again
The Guardian reports that, "Barclays is set to unveil a £2bn-plus rescue package that will see the Qatar Investment Authority boost its investment in the British bank where it already owns an 8 per cent stake. A deal that could be announced in days will see the Qataris subscribe to £1bn worth of new loan stock with another £1bn being taken up by Barclays' existing institutional investors. The special new shares will be high-yielding securities that will pay a relatively high rate of interest. The funds will allow Barclays to say that it is on track to meet new government requirements that force banks to raise additional cash to meet tighter capital adequacy ratios in the wake of the credit crunch."
read more: The Guardian
10/26/2008
China's CIC chief defends investments, Blackstone
According to Reuters, "The chairman of China's sovereign wealth fund has defended its operations, saying its investment in U.S. private equity firm Blackstone will pay off in the long run, and noted it holds over 90 percent of its assets in cash just as global equity markets are plummeting. China Investment Corp (CIC) bought its original stake in Blackstone Group just before the company's $31-a-share initial public offering in June 2007, but has seen the value of its investment sink as a year-long crisis froze credit markets, prompting widespread criticism.
Blackstone's shares ended Friday trade at $7.89."
read more: Reuters
10/24/2008
OECD Declaration on Sovereign Wealth Funds and Recipient Country Policies
The guidance has three parts:
OECD Ministerial Declaration on Sovereign Wealth Funds and recipient country policies.
Guidance that reaffirms the relevance for Sovereign Wealth Funds of long standing OECD investment principles which were first adopted in 1961 for recipient country policies.
Guidance for investment policies relating to national security. OECD investment instruments the right and the duty of governments to countries to take measure to safeguard essential security interests. This newer guidance, developed over the last year, provides recommendations for recipient country policies that help to make these policies both effective in protecting the safety of and to ensure that they are not used as disguised protectionism.
Cabinet to expand National Development Fund to stabilize economy
The Cabinet decided Thursday to expand the size of the National Development Fund from NT$200 billion (US$6.01 billion) to NT$1 trillion to increase government investment in local businesses, in a bid to stabilize the country's economic situation. Chen Tain-jy, chairman of the Council for Economic Planning and Development, said after a Cabinet meeting that the decision was made in light of the serious impact of the global financial crisis on Taiwan's economy. Chen said the Cabinet is planning to obtain the additional NT$800 billion through a loan from the state-owned Chunghwa Post Co. and invest the fund in the manufacturing and service sectors to provide momentum to the economy.
According to Bloomberg, "President Nicolas Sarkozy said France will create a sovereign wealth fund to massively aid national businesses after the global stock market rout left some companies in need of capital and at risk of takeover. The government will also put a tax on business investment on hold until the start of 2010 to bolster French companies being battered by the global economic slowdown and the likelihood of a recession in France, he said. The government will ask state-owned reinsurance company CCR to insure more credits and loans that private insurers are avoiding, he said. The state will 'massively intervene each time a strategic company, even of small or medium size, needs shareholder equity,' Sarkozy said of the new fund today at a roundtable in Annecy, France. He called the vehicle a public intervention fund. Sarkozy is pressing ahead with efforts to defend companies, measures that have received lukewarm response from his European partners. He has also helped organize an emergency summit with heads of the world's biggest economies in Washington for Nov. 15, where he will push to overhaul rules that govern world financial markets, a position being resisted by the U.S.
The French fund will be managed by state-controlled lender Caisse des Depots et Consignations and will raise funds in the market for its investments, Sarkozy said. The fund will seek to earn capital gains from taking temporary stakes in companies, he said. Europe 'mustn't be naive, mustn't leave its companies at the mercy of all predators, mustn't be the only one not to defend its interest, not to protect its citizens,' he said at a second appearance in Argonay in the French Alps. France's benchmark CAC 40 stock index has shed 43 percent this year as the global credit crisis chocked bank lending and left companies struggling to find financing. Slowing growth is also dimming the outlook for shares with the Bank of France saying that Europe's third-biggest economy likely fell into its first recession in almost 15 years in the third quarter. Business confidence in October slipped to the lowest since 1993, a report showed today."
In this report, "Turkmenistan will establish the Stabilization Fund to avoid the negative impact of the world economic and financial crisis on the national economy. This was announced by Turkmen President Gurbanguly Berdimuhamedov at a government meeting on 21 October, the Turkmenistan.ru correspondent reports from Ashgabat. According to the head of state, the Stabilization Fund will make it possible to minimize the dependence of the national economy on the oil and gas sector and also protect it from a negative impact of external factors. The fund will cluster the remaining surplus of the state budget and will be used to accumulate the financial assets of the state. The fund's resources will be channeled into the social-economic development of Turkmenistan and the implementation of various budget programmes, introduction of modern technologies and state of the art equipment. "Some part of the Stabilization Fund, namely the so called "funds of future generations" will be invested in low risk, long-term financial shares and real estate. This will be Turkmenistan's insurance fund for our children," Gurbanguly Berdimuhamedov said."
Norway's oil fund to put $2 billion towards Indian stocks
According to Reuters, "Norway's sovereign wealth fund plans to invest $2 billion in Indian stocks over the next three months, a Norwegian embassy official said on Wednesday. 'The deputy secretary general at the finance ministry (of Norway) said that sovereign wealth fund is going to invest $2 billion in Indian stocks,' Lasse Johannessen, minister counselor at the Norway embassy in Indian capital, told Reuters. 'This money is going to be invested from now until Jan 2009,' he said, citing the Norwegian finance ministry official. Johannessen said the fund would increase India's weighting to 0.94 percent from 0.2 percent in its overall portfolio."
A former top executive at hedge fund Tahoma Capital has been named chief investment officer of The Alaska Permanent Fund. Jeffrey Scott will join the Juneau-based semi-public fund next month. Scott served as CEO and CIO of Bellevue, Wash.-based Tahoma from 2005 until 2007, before founding his own financial management and consulting business, JCS Advisors. Prior to joining Tahoma, Scott managed a $60 billion absolute return portfolio for software giant Microsoft Corp. “Jeff has experience with the asset classes in our portfolio, but his experience has been managing to a different time horizon,” APFC CEO Michael Burns said. “We’re excited that Jeff will bring a different perspective to the permanent fund.”
Hong Kong Monetary Authority to offer HK$4 billion in Exchange Fund paper
The Hong Kong Monetary Authority said on Monday it would issue an extra HK$4 billion (US$515 million) in Exchange Fund paper in two batches to meet demand for liquidity from banks. To maintain existing liquidity in the banking system the HKMA said it would buy U.S. dollars against Hong Kong dollars to increase the Aggregate Balance by about HK$3.996 billion to HK$14.079 million on Wednesday. The global credit crisis had boosted banks' demand for Exchange Fund paper in recent weeks, the HKMA, Hong Kong's central bank, said. The first batch of Exchange Fund bills, totalling HK$2 billion, would be issued on Oct. 28 and the second batch of HK$2 billion would be issued on Nov. 4, the HKMA said.
Prudential negotiating with high-profile backers in attempt to bankroll AIG assets bid
Prudential is negotiating with high-profile backers who would bankroll the company's multi-billion pound bid to buy certain Asian assets of failed American insurer AIG. It has hired City bank Credit Suisse to conduct talks with cash rich sovereign wealth funds in China and the Middle East, with the Qatar Investment Authority being touted as a potential investor ready to take a stake of up to 20 per cent in the Pru for £1.2billion. The company declined to comment. However, boss Mark Tucker has made no secret of his interest in AIG's operations in countries such as Japan, India, Singapore and China.
China Currency Reserves Rise to Record $1.9 Trillion
According to Bloomberg, "China's foreign-exchange reserves rose to a world record $1.906 trillion, helping to strengthen the nation's finances as the credit crisis threatens to trigger a global economic slump. Currency holdings rose 32.9 percent at the end of September from a year earlier, the People's Bank of China said on its Web site today. The increase of about $97 billion over the quarter was down from a $126.6 billion gain in the previous three months. China has cut interest rates twice in the past month to stimulate growth as the worst financial crisis since the Great Depression dims the outlook for exports. The world's fourth- biggest economy can still expand 10 percent this year and 9 percent in 2009, central bank Deputy Governor Yi Gang said Oct. 11 in Washington."
The Wall Street Fallout Edition includes some of the following areas: Activity Snapshots Wall Street Stories SWFs and Real Estate Transparency Analysis Deals Analysis Fund Primer Sovereign Wealth Directory And MORE
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10/13/2008
IWG-SWF releases GAPP 'Santiago Principles'
In furtherance of the "Objective and Purpose", the IWG members either have implemented or intend to implement the following principles and practices, on a voluntary basis, each of which is subject to home country laws, regulations, requirements and obligations. This paragraph is an integral part of the GAPP.
GAPP 1. Principle
The legal framework for the SWF should be sound and support its effective operation and the achievement of its stated objective(s). GAPP 1.1 Subprinciple The legal framework for the SWF should ensure the legal soundness of the SWF and its transactions. GAPP 1.2 Subprinciple The key features of the SWF's legal basis and structure, as well as the legal relationship between the SWF and the other state bodies, should be publicly disclosed.
GAPP 2. Principle
The policy purpose of the SWF should be clearly defined and publicly disclosed.
GAPP 3. Principle
Where the SWF's activities have significant direct domestic macroeconomic implications, those activities should be closely coordinated with the domestic fiscal and monetary authorities, so as to ensure consistency with the overall macroeconomic policies.
Regulators continue to monitor sovereign investments in the United States
According to the Financial Week, "Although the market troubles have put a drag on corporate dealmaking, don’t expect federal authorities to slow down in their pursuit of bribery cases— especially if banks continue to seek infusions of cash from sovereign wealth funds.
'We've seen the high-water mark for [Foreign Corrupt Practices Act] cases,' said Steven Tyrrell, chief of the Justice Department's fraud section, speaking at a Securities Industry and Financial Markets Association conference today. '[But] I believe we have yet to reach the crest of the wave.'
While the current credit crisis, and the lawsuits and prosecutions related to it, may produce a crop of additional FCPA cases, Mr. Tyrrell noted the recent boom of sovereign wealth funds is an area at the top of the Justice Department's hit list, though it has not yet garnered any definitive cases. Mr. Tyrrell told Financial Week after his remarks that the DOJ was looking at both passive and active investments by U.S. securities firms into sovereign funds, and vice versa. But he would not comment on any particular investigations. He did tell conference attendees, however, that firms should conduct due diligence on key personnel at sovereign funds and find out ultimately who manages the fund: private asset managers or government officials."
Russia to use oil wealth fund for bank loans says Finance Minister Kudrin
According to 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 on Tuesday. The 450 billion 'will come from one of the funds which we have,' Kudrin said. Russia's two oil wealth funds totaled $189.7 billion on Oct. 1."
Government of Singapore Investment Corporation heeded warning of US credit crisis
According to Reuters, "When Tony Tan, executive director of Singapore's biggest sovereign wealth fund, warned in July the world might plunge into its worst recession in 30 years, many shrugged off his remarks as too gloomy. Three months later, Tan's prophecy of doom is becoming a reality as the credit crisis ravages U.S. and European banks and takes a growing toll on the global economy. Tan's Government of Singapore Investment Corp (GIC) is meanwhile sitting with 7 percent of its estimated $300 billion portfolio in cash and another 26 percent in G7 government bonds. Tan, a 68-year old former finance minister, professor and banker, and his team are now cautiously sifting through the financial carnage to shop for distressed assets in the United States in an effort to boost long-term returns for Singapore's central bank."
China Investment Corporation under review for transparency
The new website of the China Investment Corporation has prompted the Sovereign Wealth Fund Institute to review the CIC transparency rating. For the past two consecutive quarters, the CIC has had a minimal rating and was downgraded to a 1 for the 2nd quarter. As the new quarter is here, the CIC is up for another transparency assessment.
Although the LMTI ratings for all the funds will be reviewed and released in the upcoming 3rd quarter of the SWQ and here on the official Sovereign Wealth Fund Institute website, the revised score for the CIC will be released on the CIC profile page soon. For now, we can say that the new site reveals a lot more about the fund and their objectives then its predecessor.
9/26/2008
Kor sells stake to Mubadala
Kor Hotel Group, which operates about a dozen hotels worldwide, has sold a 50 percent stake to the investment arm of Abu Dhabi government to speed the company's expansion into foreign markets.
The hotel group, a unit of Los Angeles-based Kor Group, sold a 50 percent stake in itself to the Mubadala Development Co. The strategic partnership plans to focus on taking the company's Viceroy and Tides brand s into Europe, Asia and the Middle East.
Kor plans to focus on managing either Mubadala-owned properties or acting as a manager for properties not owned by Mubadala. It does not plan to build or own the hotels.
Four properties in the Middle East are currently under development, including hotels in Abu Dhabi, Dubai and Oman. Kor is also setting up regional headquarters in Abu Dhabi.
Mumtalakat Holdings posts around $650 million profit
Net income BD245.8 million Total consolidated revenues BD1.8 billion Total assets BD5.3 billion Shareholders' equity BD3 billion
According to the press release, "Bahrain Mumtalakat Holding Company B.S.C (c), the investment company for Bahrain, announced today its inaugural set of financial results for the period 29 June 2006 to 31 December 2007. Having been created in June 2006 to be an independent holding company for the Government of Bahrain's non-oil and gas assets, Mumtalakat now has a total of 35 commercial enterprises within its $14 billion portfolio. Its investment strategy is to enter into partnerships with local and international institutions targeting opportunities for long-term, sustainable financial returns."
The China Investment Corporation, a $200 billion sovereign wealth fund based in Beijing, is launching a recruiting effort to help build up internal expertise. Most SWFs have 45-50% of their assets externally managed.
Some positions include: 1.High-return Bond Investment Manager 2.Senior Lawyer 3.Emerging Markets Bond Investment Manager 4.Real Estate Investment Senior Analyst 5.Senior Research Manager 6.Risk Assessor
Persian Gulf Shares Rebound on Fed's Bailout Plan; Emaar Climbs
Persian Gulf shares advanced as the U.S. government announced a plan to buy $700 billion in bad mortgage investments from financial companies and after global markets rallied late last week.
Emaar Properties PJSC, the Middle East's biggest publicly traded real-estate company, had its biggest gain since listing in March 2000, data compiled by Bloomberg show. National Bank of Abu Dhabi PJSC rose the most in almost eight months and Zain gained after raising $4.49 billion through a capital increase.
The Kuwait Investment Authority may inject as much as 1 billion dinars ($3.75 billion) into Kuwait's stock market to alleviate recent declines, Asharq al-Awsat reported today, citing unidentified officials. The Kuwaiti government last week urged the KIA, the country's $250 billion sovereign wealth fund, to infuse 300 million dinars into Kuwait's stock market, which has seen shares lose 12 billion dinars in value so far this month, the newspaper said.
Wall Street: Where have all the Sovereign Wealth Funds Gone?
Turbocharged with extra oil cash in the first half of 2008 before the sharp 1/3 rd correction from $147 per barrel since, SWFs would have been flush again to respond to ever weakening bank equity prices. But SWFs haven't been biting. Like nearly everyone else, the credit crunch drama has turned out to be both more prolonged and severe than had previously expected, with no guarantee the worst is over, going by recent LIBOR spread widening. A banking system that now looks far too big and needs to shrink balance sheets, raising questions over solvency not just liquidity, doesn't warrant fresh capital infusions from SWF in the hope of a quick turnaround in market prices. The falling oil price has prompted further caution, though most sovereigns are still building reserves while the price remains above $50 per barrel.
This CFTC report confirms the presence of sovereign investment vehicles participating in the commodities market.
According to the CFTC, four entities were identified as sovereign wealth funds:
2 separate pension funds run by a European government 1 fund in the name of a North American government 1 fund in the name of a European city
For single-commodity clients of swap dealers 6 entities that appear to be sovereign wealth funds were identified as above the threshold levels described earlier (i.e., total all-months gross futures equivalent position of 25 percent or more of a single-month limit or level).
Norway oil fund exits Rio Tinto on ethical grounds
Norway on Tuesday excluded iron ore miner Rio Tinto from its $375 billion (212.8 billion pounds) sovereign wealth fund due to environmental concerns over its activities in Indonesia, as part of its drive for ethical investment.
Norway's Government Pension Fund -- Global, familiarly known as the "oil fund", invests under ethical guidelines set by the government. In the past it has excluded companies producing nuclear arms or cluster munitions and ones deemed to have caused environmental damage or abused workers' or other human rights.
The fund invests Norway's oil and gas wealth in foreign stocks and bonds, is Europe's biggest equity investor and holds on average over 1 percent of European listed shares.
Preview article for the next Sovereign Wealth Quarterly - October Release Q3 Y2008 Some SWFs are looking opportunistically at discounted residential properties in the West.
Bulk purchases on distressed residential properties are coming into focus for many sovereign wealth funds and other institutional investors. Some SWFs who invest in real estate stick with core real estate investments like hotels, offices, and apartments. Even some Saudi investors are looking opportunistically in acquiring agricultural real estate to stem rising food costs. These types of investments have yielded acceptable IRRs for many of the funds. Another advantage is that real estate investments are not as politically sensitive as acquiring stakes in foreign brand name corporations.
Now, a number of SWFs are looking opportunistically at discounted residential properties in the West. The United States, the UK, and Australia have been ideal candidates for sovereign wealth distressed real estate investment, in the sense that these markets are developed and REO assets are at significant discounts from their original prices. Property rights, liquidity, and ease of foreign investment requirements in real estate have also made the West an attractive opportunity. Numerous financial institutions want these assets off their balance sheets. Many sovereign investors and hedge funds are viewing these REO portfolios from 50 cents to 70 cents on the dollar.
According to RealtyTrac, an online marketplace for foreclosure properties released its Q2 2008 U.S. Foreclosure Market Report. The report shows, "foreclosure filings were reported on 739,714 U.S. properties during the second quarter, a nearly 14% increase from the previous quarter and a 121% increase from the second quarter of 2007. The report also shows that one in every 171 U.S. households received a foreclosure filing during the quarter."
Source: RealtyTrac
The views in this publication are expressed by Michael Maduell.
Michael Maduell is the Founder and President of the Sovereign Wealth Fund Institute.
9/8/2008
Italy wants study of EU sovereign fund - minister
Italy will propose that the European Union consider changing the European Investment Bank (EIB) into a sovereign investment fund for the 27-nation bloc, Economy Minister Giulio Tremonti said on Sunday.
Tremonti said such a fund could make major investments and could be one way for Europe to overcome its economic crisis. The fund could be similar to Italy's Cassa Depositi e Presiti, a state investment company that has counterparts in several European countries.
"The proposal is to turn the EIB into the European Cassa Depositi e Prestiti, that would become the sovereign fund on the European level but that could function on the local level as well," Tremonti told reporters on the margins of an economic conference.
Federal Reserve limits ICBC Loans to China Fund-Owned Companies
According to Bloomberg, "The Federal Reserve told China's sovereign wealth fund it cannot subsidize loans for its companies through the New York branch being opened by government-controlled Industrial & Commercial Bank of China Ltd.
Companies controlled by China Investment Corp. may borrow only on "market terms" from the branch of government-owned ICBC, according to a letter released today by the Fed in Washington and dated Aug. 5. Transactions with such companies are limited to 20 percent of the branch's lending base, the Fed said."
International Working Group of Sovereign Wealth Funds Reaches a Preliminary Agreement on Draft Set Generally Accepted Principles and Practices-"Santiago Principles"
The members of the International Working Group of Sovereign Wealth Funds (IWG), which met on September 1-2, 2008 in Santiago, Chile, reached today a preliminary agreement on a draft set of principles and practices for recommendation to their respective governments.
The Generally Accepted Principles and Practices for Sovereign Wealth Funds (GAPP) is a voluntary framework that would guide the appropriate governance and accountability arrangements, as well as the conduct of appropriate investment practices by SWFs. In response to the call from the International Monetary Fund's policy-guiding International Monetary and Financial Committee (IMFC), the IWG expects to present the GAPP to the IMFC at its October 11 meeting in Washington DC. The IWG intends to publish the GAPP thereafter.
The IWG members also decided to explore the establishment of a standing group of sovereign wealth funds (SWFs). This is in recognition of the need to carry forward the work relating to the GAPP, as necessary, and to facilitate dialogue with official institutions and recipient countries on developments that impact SWF operations.
IMF urges transparency as wealth fund meeting stormed
A top IMF official on Wednesday urged transparency from cash-rich global sovereign wealth funds, as protesters stormed a meeting of the world's largest state-run pension funds in the Chilean capital.
International Monetary Fund First Deputy Managing Director John Lipksy said best practice guidelines agreed on by the world's largest sovereign wealth funds this week will help reduce concerns about their investments and ward off protectionist pressures from countries where they invest.
Under the proposed guidelines the IMF will not monitor adherence to agreed, voluntary principles by the funds, who manage around $2 trillion to $3 trillion in assets between them. Instead, it is expected that those that adopt the guidelines will be better regarded than those that do not.
Abu Dhabi United Group purchases Manchester City Football Club
Abu Dhabi United Group for Development and Investment (ADUG) has bought the English football club Manchester City, Dr Sulaiman Al Fahim, chief executive officer of Abu Dhabi-based real estate developer Hydra Properties, told Gulf News on Monday.
"The amount paid for the acquisition of the club cannot be disclosed. The acquisition will help the Abu Dhabi brand name and allow talented UAE players to play in the premier league and get access to all the world class opportunities that exist," said Al Fahim by telephone.
Al Fahim, a member of the Abu Dhabi United Group board, was the architect of the deal. Former Thailand Prime Minister Thaksin Shinawatra was the previous owner of Manchester City, one of the oldest English clubs founded in 1880.
Anonymity
