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Archived News - October 2008
10/31/2008
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
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
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
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
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
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
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
 
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
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.
read more: OECD Declaration on SWFS and Recipient Country Policies
10/24/2008
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.
read more: Taiwan News
10/23/2008
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."
read more: Bloomberg
10/23/2008
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."
read more: Turkmenistan.ru
10/23/2008
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."
read more: Reuters
10/22/2008
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.”
read more: FINalternatives
10/21/2008
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.
read more: FXStreet
10/19/2008
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.
read more: Mail Online
10/15/2008
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."
read more: Bloomberg
10/13/2008
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10/13/2008
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.
read more: GAPP - Santiago Principles
read more: International Working Group - Sovereign Wealth Funds
10/8/2008
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."
read more: Financial Week
10/8/2008
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."
read more: Reuters
10/4/2008
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."
read more: Reuters
10/1/2008
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.
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