Sovereign wealth funds are comfortable investing directly into Europe. Given geopolitics, the investment environment and a deep history with Asia and the Middle East, Europe maintains its status as a center for sovereign wealth assets. By analyzing the top 25 sovereign wealth funds ranked by assets, a significant portion of them have European operations, particularly in London.
Across the pond, sovereign wealth funds are also heavily allocated to the United States, but not directly. In the U.S., with the exception of institutional real estate, sovereign wealth funds extensively use intermediaries and local partners to channel their monies. This approach directly contrasts that of their European investments.
Period: 3QY2011 to 2QY2012
Source: Sovereign Wealth Fund Transaction Database (Sovereign Wealth Fund Institute)
It is interesting to note that despite apparent cracks in European financial stability, sovereign funds continue to favor Europe, picking up real estate properties in London, Paris and other prime locales. Singapore’s two sovereign wealth funds, GIC Private Limited and Temasek Holdings, have augmented their presence in European investment affairs. Just in the past few months, GIC Private Limited became the second largest private shareholder of Royal Mail plc. The Singapore wealth funds also invested in Rothesay Life – getting exposure to the insurance sector. Broadgate, the massive London office and retail complex, was courted by the GIC. This is not a recent phenomenon – Asian sovereign funds made key inroads into Europe during the global financial crisis. They provided liquidity to European institutions like UBS, Barclays and Credit Suisse.
The Korean peninsula hosts a number of mega asset owners such as the Korea Investment Corporation (KIC) and Korea’s National Pension Service (NPS). Both opened up London offices. The trend of Asian public investors wanting greater exposure to European real estate, fixed income, equities and infrastructure is growing. For example, Korea’s NPS, the fourth largest pension investor in the world, moved billions into the UK by investing in assets such as London’s Gatwick Airport and Canary Wharf. The China Investment Corporation (CIC) and Qatar Investment Authority (QIA) mirrored these investments.
Similar deals and transactions akin to these abound. The take away message is this: there is a conspicuous and increased level of investment in Europe particularly by Asian funds. And, more notably, these funds are willing to invest directly – as opposed to using intermediaries – into these various assets.
Data Collective led a US$ 15 million Series A round into Salt Lake City-based Fortem Technologies, Inc., a company that works on solutions that can detect, identify and classify drones in real time to maintain airspace safety. Other investors in the round include Boeing, Mubadala Investment Company, Manifest Growth, New Ground Ventures and Signia Venture Partners.
Ibrahim Ajami, Head of Mubadala Ventures said in the press release, ” Mubadala is excited to work with Fortem and its outstanding leadership team to help grow its business to new markets.”
Ajami added, “We strongly believe the TrueView radar is essential to maintain a safe airspace for both the aircraft and the critical infrastructure on the ground.”
The Ireland Strategic Investment Fund (ISIF) and CIC Capital Corporation – a sovereign wealth enterprise (SWE) of the China Investment Corporation – announced the formation of a joint €150 million fund targeting high-growth Irish technology firms looking to expand into Chinese markets, as well as a special emphasis on Chinese companies hoping to set up shop in Ireland as a base for their European operations.
[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]
The Council of Institutional Investor’s spring conference for 2018 – held this week in Washington D.C. at the Omni Shoreham Hotel – was packed with member-hosted panels, where nearly 400 of the top investment professional, regulators, and corporate governance experts gathered together to share their insights and engage in forward-looking discussions on how to drive a multi-stakeholder approach to responsible investment over the long-term.
Sovereign Wealth Fund Institute (SWFI) had the opportunity to attend several breakout sessions, including one presented by Maryland-based Institutional Shareholder Services that sought to address one of the most pressing challenges facing institutional investors today: How can environmental, social, and governance (ESG) criteria help drive voting at the board level? Moderated by Georgina Marshall, Head of Global Research at ISS, panelists provided a diverse array of perspectives on how to harness ESG considerations as an effective decision-making tool.
For Bonnie Saynay, Global Head of Responsible Investments at Invesco, fostering an environment conducive to communication with investment teams using a “player-coach” model is critical. Moreover, Saynay warned investors of thinking too broadly on ESG considerations, and to instead focus in on the criteria that is most important to them as an organization, and to then tailor their stewardship practices to match those priorities: “If everything is important, nothing is important,” she said.
Clare Payne, head of corporate governance for North America at Legal & General Investment Management, highlighted the importance of procuring the latest ranking data from a number of different providers, as well as how to develop one’s own internal system for scoring so as to cut through the clutter and provide a contextualized framework for making investment decisions on your own terms.
Remuneration is the name of the game for Robbie Miles, Vice President and ESG analyst at Allianz Global Investors. Amid the ever broadening scope of influence that responsible investment commands, Miles urged attendees to work with their managers on mandates that link compensation to the long-term performance of the fund, as well as long-term holding periods.
Wrapping up the panel was Stu Dalheim, Vice President of Shareholder Advocacy at Calvert Research Management, advocated for diversity at the board level across a number of different metrics – including ethnicity, gender, and professional backgrounds – in order to reflect the reality of their client base, as well as provide an apparatus for robust debate and adaptation in an ever-changing business environment.
3 weeks ago
Charles Brandes Throws in Towel Stemming from Nasty Divorce Proceedings
3 weeks ago
Recent Photos from SWFI Institutional Investor Forum 2018, Santa Monica
3 weeks ago
AIIB Positions Itself within India, Seeks Opportunity with NIIF
3 weeks ago
CDP and EBRD to Sign Green Infrastructure Agreement With International Scope
3 weeks ago
Why the Launch of Japan Post Investment Corp is Huge News?
3 weeks ago
Norway’s SWF Open to German Mittelstand
2 weeks ago
Chat with the Chief: Matt Whineray
2 weeks ago
Nippon Life Buys MassMutual’s Japan Business For $982 Million