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2014 Looks to Beat 2013 in Sovereign Wealth Fund Transactions

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sovereign wealth fund transactionsIncreasingly, sovereign wealth funds are investing directly. The larger sovereign funds are getting involved in more deals, whether in institutional real estate, partaking as a group member in a company acquisition or buying more shares on the open market. As a whole, the world of sovereign wealth funds is rapidly expanding due to numerous factors. One significant factor is the number of new sovereign wealth funds cropping up, particularly in Africa and the Americas. Our rankings put sovereign wealth fund assets, as of September 2014, at US$ 6.7 trillion. In September 2009, sovereign wealth fund assets were at US$ 3.9 trillion. It is true that sovereign wealth is concentrated in the upper echelon of the fund rankings; however, some of the mid-sized to smaller funds are taking a more active approach to investing. These smaller funds are also increasing allocation to real estate and private equity. For example, the Texas Permanent School Fund boosted private equity allocation in 2014 to 10% from 6% in 2013. Some sovereign funds are attempting to take advantage of the illiquidity premium associated with some alternative investments.

Sovereign Wealth Fund Transaction Database

According to the Sovereign Wealth Fund Transaction Database, as of September 2014, the first half of 2014, we recorded US$ 51.13 billion in direct transactions. For the first half of 2013, we recorded US$ 42.39 billion. This 20.6% increase in sovereign wealth fund direct transactions can be greatly explained by increased real estate deals (many being larger in size).

This unique group of institutional investors engages in a variety of investment styles and asset allocation. Some of the younger sovereign funds will embark on fixed income and public equities initially, before dabbling into alternative assets like real estate, private equity and hedge funds.

Korea’s NPS Invests In Crypto Exchanges Amid Crackdown

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South Korean news outlets have reported that South Korea’s National Pension Service (NPS) has unwittingly invested roughly US$ 2.4 million in four local cryptocurrency exchanges – Korbit, Upbit, Coinplug, and Bithumb – even as regulatory officials move to subdue the unbridled enthusiasm for crypto trading that has flourished in the tiny country. The US$ 550 billion pension scheme invested in the cryptocurrency exchanges indirectly through two venture capital funds handled by external managers with exclusive rights over asset allocation, according to an NPS officer.

Crypto trading has proved wildly popular in South Korea, drawing an estimated one million citizens to the largely unregulated exchanges that have cropped up over the past few years. South Korea, which is ranked first in the world in terms of internet sped, is the largest market for cryptocurrency transactions behind Japan and United States, and accounts for 29.8% of trade globally, according to a report released by the Korea Insurance Research Institute (KIRI) in December 2017.

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Ripple Attempts to go the Central Bank Route

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San Francisco-based Ripple, a tech company that professes the use of blockchain to reboot the payment systems globally, landed a big deal with the Saudi Arabian Monetary Authority (SAMA). Ripple started a pilot program that will be spearheaded by SAMA and a few Saudi banks to deploy xCurrent for cross-border payments. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Investment Corporation of Dubai Eyes $1 Billion Loan Deal

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The Investment Corporation of Dubai (ICD) plans to raise US$ 1 billion in a loan to refinance existing debt. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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