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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.

Norway SWF Votes Down Paris Climate Targets at Shell Shareholder Meeting

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Norges Bank Investment Management (NBIM), which oversees Norway Government Pension Fund Global, voted down a proposal put forward by some investors at Royal Dutch Shell’s annual general meeting calling on the company to set emissions targets in line with the Paris climate accords of 2015. The challenge was shot down by 94.5% of Shell shareholders at Tuesday’s proceedings. Its defeat was followed by a statement from the oil giant calling the resolution “unnecessary” in light of the firm’s plans revealed in November to halve its carbon footprint by 2050. Some investors believe Shell would be in a better position to set their own goals on addressing issues like climate change.

The US$ 1.1 trillion sovereign wealth fund – which is itself reliant on cash-streams from Norway’s hydrocarbon stores – announced last July it would be asking the banks in which it invests nearly a quarter of its equity assets to disclose how their lending contributes to greenhouse emissions, and is currently considering whether to drop its exposures in oil and gas companies constituting roughly 6% of its overall portfolio ahead of a parliamentary vote on the proposed policy change later this year.

The climate change motion was featured by 60 long-term institutional investors representing more than US$ 10 trillion in assets – including HSBC, BNP Paribas, Fidelity, Swedish buffer fund AP7, France’s ERAFP, and the United Kingdom’s National Employment Savings Trust (NEST) – in an open letter published during the week of May 16th by The Financial Times urging fossil fuel companies to “clarify how they see their future in a low-carbon world,” without going so far as to openly support its approval.

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PSP Investments Finished Deal on Equity Stakes in AEA and AELO in Portugal

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On May 11, 2018, ROADIS, which is owned by PSP Investments, finalized the purchase of equity interests in Portugal´s Auto Estradas do Atlantico (AEA) for 50% ownership and Auto Estradas do Litoral Oeste (AELO) for 60% ownership from MSF Group (Moniz da Maia, Serra & Fortunato, Empreiteiros) and Lena Group (known locally as Grupo Lena). This is ROADIS’ first investment into Portugal.

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USS Backs Rental Housing Platform Managed by PfP Capital

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The £60 billion Universities Superannuation Scheme (USS) is providing the majority of the funding toward a joint venture to invest in the U.K. private rented sector.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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