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BRIEFING: Sovereign Funds Hold Steady on Private Equity Allocation

swfi_PE_coveraug2016_1Sovereign wealth funds are major allocators to private equity in all forms, whether in private equity funds, co-investing or direct investing. As of June 2016, total sovereign wealth fund assets amounted to US$ 7.37 trillion.

Sovereign Wealth Fund Private Equity Allocators – 2016

Sovereign Wealth Fund Private Equity Allocators – 2015

Traditionally, public pensions have been a reliant source of capital for private equity deals. However, sovereign wealth funds continue to gain ground in the private equity investor base, as assets steadily grow for the institutional investor class. The total sovereign fund allocation to private equity tepidly increased for the year ended June 30, 2016, for a number of reasons. First, several wealth funds have been realigning their private equity fund interests, selling some off to secondary buyers (sometimes even other asset owner peers), while continuing to recommit to strategic/geopolitical private equity funds, push capital into separate accounts, augment co-investment activity or allocate to top-quartile funds. Second, a clear majority commodity-based wealth funds, along with a number of Asian wealth funds, needed to increase portfolio liquidity in 2015 and early 2016. This also led to wealth funds selling off direct investments in private equity and real estate. By doing this, wealth funds are building cash reserves in case of liability needs, while “storing energy” for distressed companies and assets down the road.

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Source: SWFI – August 17, 2016

UNICEF and NBIM to Host Meetings on Children’s Human Rights

The United Nations Children’s Fund (UNICEF), a United Nations programme headquartered in New York City, has partnered with Norges Bank Investment Management (NBIM) to facilitate a series of meetings between companies to discuss issues surrounding children’s human rights.

According to the news release, “the network will facilitate dialogue between leading brands and retailers in the garment and footwear industry to strengthen children’s rights.”

NBIM is invested in many listed companies and have invited them to join a network to tackle these issues. Over the next two years, the organizations plan to hold three workshops as well as quarterly meetings surrounding these issues.

“Over time, we hope and expect that the network will contribute to improved market practices among companies and greater respect for children’s rights,” says Carine Smith Ihenacho, Global Head of Ownership Strategies, in a NBIM press release.

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SouthGobi’s CEO Arrested, CIC Struggles with Investment

The China Investment Corporation (CIC) has long struggled with its investments in coal assets, specifically in globally-listed coal miner SouthGobi Resources Ltd, which operates its flagship coal mine in Mongolia. In November 2009, CIC and SouthGobi Resources inked a convertible debenture deal. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Qatar Central Bank Deals with MSCI

MSCI, a stock index company whose benchmarks influence investor behavior, has tremendous indirect power impacting the stock markets of smaller economies. In 1988, MSCI released its emerging markets index, a now-widely-used benchmark for many institutional investors wanting access to growth markets. China and South Korea make up the majority of the benchmark, but smaller economies such as Poland, Chile and even Qatar make up other pieces of it.

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