Sovereign Wealth Fund Institute

According to the Wall Street Journal, “China Investment Corp., the country’s $300 billion sovereign-wealth fund, was one of the biggest third-party investors in 3i Group PLC’s (III.LN) EUR1.2 billion growth capital fund raised earlier this year, a person familiar with the situation said Wednesday.

“3i has good ties with CIC and has been welcomed by the government there as it has been in India,” the person said, adding that 3i has been exploring raising a yuan fund that CIC could be involved in, although no decision has yet been taken.

In China, the growth of yuan-denominated funds, which don’t need government approval to buy assets there, has added to the competition. Like other international private equity firms seeking an edge in China, Blackstone Group (BX) and Carlyle Group LP are raising yuan-denominated funds, which come from local investors.

On Wednesday, CIC supervisory board Chairman Jin Liqun said the sovereign wealth fund is keen to continue forming partnerships with other fund groups in investing, but didn’t mention any specific deals.

“We have projects with different partners and to expand collaboration in the future,” Jin said in a speech at the private equity-focused Super Return Conference in Hong Kong Wednesday, but didn’t’ elaborate. “We seek to make superior risk adjusted returns and act as a stabilizing force in a world of volatility.”

Read more: Wall Street Journal

According to Business 24-7, “Protectionist barriers aimed at capital-rich sovereign wealth funds (SWFs) could backfire on the fragile global economy, top executives of major state investment firms warned yesterday. The sovereign funds have the capital needed by affected economies to recover from the global crisis but governments may come under domestic pressure to impose protectionist measures, they said. Tony Tan, Deputy Chairman of the Government of Singapore Investment Corp (GIC), said the biggest danger facing the world economy in coming years is protectionist sentiment, which may be stoked by high unemployment rates. Tan, speaking at a business forum on the sidelines of an Asia-Pacific summit, said protectionism could spread from the trade arena to financial markets.

“This could manifest itself in the form of protectionist measures not only in world trade but also in financial markets and impede the free flow of funds,” he said.

“If nothing else, this could derail the global economic recovery which all of us are hoping for,” said the GIC deputy chairman.

Jin Liqun, from the China Investment Corporation (CIC), also cautioned against barring investments from government-owned funds. “The sovereign wealth funds will be playing a big role in rebalancing the process but we need co-operation from the recipient countries,” said Jin, CIC’s chairman of the board of supervisors.

“There’s nothing we can do if we are barred from doing our jobs in your countries or when hurdles are very high for us to overcome,” he said.

Jin said sovereign funds can play a major role in restructuring economies.

“Countries need a cushion in undertaking major economic restructuring and provisional funding is of course crucial,” he said, adding that the global recovery was not irreversible.

When the global crisis unfolded, SWFs emerged as a source of crucial capital, especially to Western financial firms and banks in dire need of fresh funding. Singapore’s GIC, which manages the city-state’s reserves of more than $100 billion (Dh367bn), was one of the rescuers of US-based Citigroup and Swiss banking giant UBS. Kuwait Investment Authority’s (KIA) Managing Director Bader Al Saad told the forum that SWFs have collectively pumped $90bn into financial institutions in the last few years.

“I think now we are in a new era of engagement,” said Al Saad.

“There is a unique opportunity for the sovereign wealth funds to represent themselves as investors in the world… They are a long-term investor,” he said.

Al Saad also said perceptions that SWFs were a source of destabilisation in financial markets and that investments were driven by political agendas could not be further from the truth.

“Most of their transactions are cash transactions so there is a real economy and it shows that they are responsible investors,” he said.

“They are a source of stability and last but not least, they are strategic investors… On top of that, they never make hostile takeovers.”"

read more: Business 24-7