Alternatives

Korea’s Largest Public Fund Invests $390 Million in PE Vehicle

Korea’s National Pension Service (NPS) is moving billions of capital toward alternative asset classes such as private equity and institutional real estate. The largest pool of public retirement assets in Korea will invest in a 400 billion KRW (US$ 390 million) private equity co-investment fund. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Singapore Sovereign Wealth Invests in Indian E-Commerce Flipkart

Singapore’s GIC Private Limited has joined existing investors Accel Partners, DST Global, Iconiq Capital, Morgan Stanley Investment Management (MSIM) and Sofina to invest a total of US$ 1 billion in Flipkart. Flipkart is India’s biggest e-commerce company, competing against another Indian company called Snapdeal. Singapore’s other sovereign wealth fund, Temasek Holdings, invested in Snapdeal. Snapdeal and Flipkart are vying to be called the “Amazon.com of India.”

The capital raise reflects institutional investors’ heightened appetite in Indian e-commerce companies. The funds will be used to invest in other companies and make internal strides in mobile technology.

Flipkart co-founders, Sachin Bansal and Binny Bansal, both went to the Indian Institute of Technology (IIT). The founders are not related to each other. Both Bansals worked at Amazon before creating the online bookstore in 2007.

Asian Sovereign Wealth Fund Withdraws £4 Billion from Aberdeen

Aberdeen Asset Management PLC suffered a £4 billion withdrawal from an Asian sovereign wealth fund. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Pensions and Sovereign Funds Contribute to Massive Profits for Blackstone

blackstone

Equity research firms like JMP Securities and RBC Capital have raised their price targets on The Blackstone Group L.P., after the private equity firm disclosed recent financial information. For the Blackstone Group, second quarter profit is measured as economic net income. Economic net income grew by 89% to US$ 1.3 billion since the second quarter of last year. This measure also factors in unrealized investment gains.

Blackstone’s performance fees rose dramatically, spurred by profits on investments. Last-twelve-month realized performance fees climbed to a record high of US$ 1.9 billion. By expanding into credit, real estate and hedge funds, Blackstone has been able to feed the appetite of sovereign wealth funds and pensions craving alternative assets and yield. Blackstone’s real estate business has generated lots of fees and has grown with more assets under management.

See which sovereign wealth funds and pensions have allocations with Blackstone

Blackstone Group by Selected Segments – Economic Income – Millions USD

Fiscal Period Real Estate Private Equity Hedge Fund Solutions Credit Financial Advisory
1Q Y2012 267.25 89.98 66.36 87.16 -10.48
2Q Y2012 197.14 -65.06 26.08 54.72 8.84
3Q Y2012 288.71 189.28 82.09 76.20 -3.26
4Q Y2012 246.02 198.07 82.74 107.20 51.98
1Q Y2013 352.94 103.20 93.86 98.50 -10.17
2Q Y2013 370.89 171.22 71.37 82.01 23.90
3Q Y2013 414.04 80.49 76.66 73.28 10.55
4Q Y2013 932.10 360.45 134.64 104.70 51.40
1Q Y2014 320.92 319.25 113.90 81.02 -9.84
2Q Y2014 489.37 647.74 83.11 103.75 27.03

Source: Blackstone Group – Financials – Extracted July 21, 2014

$279 Billion

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GPIF Chooses Coller Capital Partner for Investment Committee Spot

Japan’s Government Pension Investment Fund (GPIF), US$ 1.27 trillion in size, chose Hiromichi Mizuno to join the fund’s investment committee. Based in London, Mizuno replaces Kimikazu Nomi, CEO of a state-backed investment group called Innovation Network Corporation of Japan. Nomi’s term expired earlier in July.

See Key Executives and People – Japan’s GPIF

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Carlyle Cardinal Ireland Fund Gets €292 Million

The Carlyle Group and Cardinal Capital Group on July 14, 2014, had a final close of Carlyle Cardinal Ireland Fund which raised €292 million. Founded in 2003 by Nigel McDermott and Nick Corcoran, Cardinal Capital Group is an investment management firm with offices in London and Dublin.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Bidders for South Korea’s Parnas Hotel Line Up

Gangnam district in SeoulInstitutional investors are bidding for a majority stake in South Korea’s Parnas Hotel Co Ltd. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

ADIA Looks to Dump 2 Billion in Private Equity Secondaries

Institutional investors such as public pensions, financial institutions and sovereign wealth funds eye secondary market sell-offs to reconfigure private equity portfolios.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

IFC Catalyst Fund Raises US$ 418 Million Toward Climate-Related Investments

The IFC Catalyst Fund is a private equity fund of funds focused on providing growth capital for companies delivering resource efficiency and low-emission products and services in emerging markets. The fund is managed by IFC Asset Management Company LLC, a wholly-owned subsidiary of the International Finance Corporation (IFC). The IFC Catalyst Fund has raised about US$ 418 million. The fund plans to commit 50% of the capital to first time private equity managers, who have would have a challenging time raising capital without expertise. Since 2005, the IFC has committed more than US$ 11 billion in an approximate 600 climate-related projects. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

MOOO: Sovereign Funds Thirst for Dairy

The dairy sector has attracted a significant number of public investors including sovereign wealth funds. Singapore’s GIC Private Limited and Olympus Capital led a group of investors to invest US$ 106 million in China’s Huaxia Dairy Farm Ltd. The Singapore sovereign wealth fund is investing the bulk of the capital at US$ 70 million. Olympus Capital is committing US$ 30 million and smaller shareholders including Beijing-based Grand River Capital are investing US$ 6 million. However, the private equity firm Olympus Capital remains the largest shareholder of Huaxia Dairy Farm Ltd., investing a total of US$ 108 million in the company.

Founded in 2004, Huaxia Dairy Farm Ltd manages three dairy farms outside of Beijing. The company also has a retail presence in China, selling product under the Wondermilk and Wonderyoghurt titles.

Temasek Holdings

In November 2013, Singapore’s Temasek Holdings and Chinese private equity firm Hopu, along with three other investors, participated in a US$ 213 million investment in Yashili International Holdings Ltd. Yashili manufactures pediatric milk formula products and milk formula for pregnant women under the brand names of Yashily and Scient.

Kuwait Sovereign Wealth and Fondo Strategico Italiano Create FSI Investimenti

The government of Italy is building strategic economic ties with the Gulf countries – thus marking a previous set of transactions with Qatar’s sovereign wealth fund. Fondo Strategico Italiano (FSI) and the Kuwait Investment Authority (KIA) have developed an investment entity with commitments and assets worth €2.185 billion. The entity called FSI Investimenti is 77% owned by the FSI and the remaining owned by the Kuwait sovereign wealth fund. Other co-investors can invest into the new entity. Both the KIA and FSI will commit to insert €500 million into the company.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Abu Dhabi Investment Authority Releases 2013 Annual Report

The Abu Dhabi Investment Authority (ADIA) has released its 2013 annual report. The Gulf sovereign wealth fund detailed its 2013 experiences and organizational changes. ADIA’s Managing Director Hamed bin Zayed Al Nahyan commented in the report that, ” Beyond China, the emerging market world is becoming far more diverse, and less easy to classify. Meanwhile, the developed world remains critically important to global investors as it is still the primary source of high-quality, investable financial assets, and continues to set the agenda for economic policies and regulation.”

View Abu Dhabi Investment Authority Profile

The 2012 report took on a more positive tone on emerging markets. In 2013, ADIA made larger equity allocations in Asia and Southern Europe. The Gulf sovereign fund held its band in emerging market equities between 10% to 20%.

External Manager Process Changes

With around 75% of assets being externally managed, ADIA has modified some of its procedures. ADIA implemented an analyst note program which consolidates intelligence on individual asset managers and initiated a standardization process on manager reviews.

In addition, ADIA hired several new external managers in equities – selecting ones with high convictions and gearing toward alpha. ADIA’s hedge fund portfolio performed well, especially in the strategies of event-driven equities and equity hedge.

Thomas H. Lee Partners Attracts Sovereign Wealth Funds

private equity

Boston-based Thomas H. Lee Partners LP (THL) is rekindling fundraising efforts for its new buyout fund. The private equity firm is attempting to raise between US$ 3 billion and US$ 4 billion for its latest fund – tapering expectations of its sixth fund, Thomas H. Lee Equity Partners VI, that raised US$ 8.1 billion in December 2007. In 2007, THL also raised US$ 2 billion for co-investment vehicles in regard to the sixth fund. THL invests in a number of industries such as financial services, media, information businesses, consumer goods and healthcare.

Sovereign Wealth Fund Commitments

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Tepid Raise for Carlyle’s Second Financial-Focused Buyout Fund

financial buyouts

Sovereign wealth funds, pensions and other institutional investors, in some cases, reluctantly moved money into the Carlyle Group’s second fund targeting financial institutions such as insurance companies, banks, brokerages and asset managers. Carlyle Global Financial Services Partners II is at US$ 1 billion, but it took nearly three years to raise capital. The second fund has a minimum commitment threshold of US$ 10 million. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Oaktree Capital Continues to Gain More Sovereign Wealth Fund Clients

credit funds

Debt funds have become important in Europe, as traditional lenders encounter tighter financial regulation. Investment firms like Bayside Capital, Oaktree Capital and Sankaty Advisors have filled in the gaps left by these European institutions. Times are changing for credit funds, as finding high-quality debt plays are rapidly slowing down. This is true partly because the Federal Reserve is pinning down interest rates near zero coupled with low defaults globally in corporate bonds.

Led by value investors Howard Marks and Bruce Karsh, Oaktree Capital Group, LLC has been able to lure yield-hungry public funds toward its various investment vehicles. Marks and Karsh, TCW alumni, along with five others, have created a publicly-traded asset management firm managing around US$ 6.4 billion in capital for eleven sovereign wealth funds including Australia’s Future Fund. As of March 31, the company managed US$ 86.2 billion in total assets.

In the letter, Marks goes into detail on asking questions regarding investment beliefs and investment principles that relate to process.

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Singapore Sovereign Wealth Centers on iParadigms LLC With Insight Venture Partners

Increasingly, Asian sovereign wealth funds are centering on technology investments, partnering with private equity firms in the United States on buyout deals. Oakland-based iParadigms LLC, an anti-plagiarism software company, agreed to a transaction to sell to private equity firm Insight Venture Partners and GIC Private Limited, one of Singapore’s sovereign wealth funds, for US$ 752 million. This deal includes debt.

By April 2010, Turnitin was being used by all four major universities in Singapore.

“As a leading global investor, we are enthusiastic about the opportunity to partner with Insight and management to help iParadigms further expand its international footprint,” said Eric Wilmes in a iParadigms press release who is head of the North America Direct Investments Group, at GIC Special Investments. “The company, with its best-in-class education platform, is very well positioned for long-term success.”

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Apollo Wins By Getting US$ 750 Million From Alaskan Sovereign Fund

The Alaska Permanent Fund Corporation (APFC) gave Apollo Global Management a US$ 750 million mandate targeting funds and assets across the credit space. The APFC Board of Trustees met in Ketchikan, Alaska to approve several private asset investments. Increasingly, pensions and sovereign funds have allocations that are behaving like bank institutions, lending money and generating yield. Apollo CFO Martin Kelly mentioned institutional investors’ thirst for credit in a previous article.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Sovereign Funds Eye Alternative Credit, Apollo Execs Say

private_equity2

Sovereign wealth funds, public pensions and other large institutional investors are bullish on alternative credit, according to Martin Kelly, chief financial officer of Apollo Global Management. Large institutional clients are prepared to provide enough capital for Apollo to work with them to customize their accounts based on risk, geography, and liquidity preferences, Kelly said during Apollo’s Q1 2014 earnings call held on May 8th.

“We think the largest institutions in the world are waking up and saying that there’s just better risk/return in alternative credit, opportunistic credit, illiquid credit, and non-rated credit,” he said on the call.

This is at a time when some loans in the United States are being rapidly issued with loose terms.

During the call, Joshua Harris, co-founder and senior managing director for the Manhattan-based alternative asset manager, highlighted aggressive pricing in public equity, private equity and traded credit markets as the driving force behind institutional investor interest in alternative credit.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

GIC Buys Stake in Spanish Inspection Company Applus

Singapore’s sovereign wealth fund GIC Private Limited acquired a 6.5% stake in Applus. Spain-based Applus is an industrial testing firm that went public in May. The GIC acquired €127 million worth of shares according to filings. This is compared to Applus raising €1.1 billion in its Spanish initial public offering. Around 55% of shares sold in the Applus IPO went to UK investors. The Carlyle Group dumped most of its 68.3% stake in the IPO.

This is the second IPO in Spain since the summer of 2011.

In July 2007, The Carlyle Group acquired Applus from its shareholders Agbar, Unión Fenosa and Caja Madrid for an enterprise value of €1,480 million.

Which Public Funds Are Behind Onex’s $5.15 Billion Private Equity Raise

torontoskyToronto-based Onex Corporation closed Onex Partners IV, L.P., a private equity fund targeting large-scale, value-oriented North American businesses. Armed with a middle-market buyout strategy in mind, the fund closed at US$ 5.15 billion, surpassing the initial target of US$ 4.5 billion. Onex is putting up US$ 1.2 billion of its own capital into the fund. This is not new for Onex as the firm frequently ends up being the largest limited partner in its private equity funds.

This is the largest fund closing for the publicly-traded private equity firm. Onex began acquiring businesses in 1984 and was founded by its current CEO Gerald W. Schwartz. In the early years, Onex used its own capital and brought in strategic partners to finish acquisitions. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]