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China’s ASEAN Investment Fund Seeks to Raise $3 Billion

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The China-ASEAN Investment Cooperation Fund (CAF) – a dollar-denominated private equity fund formed under direction of China’s State Council in 2010 that targets investments in infrastructure, energy, and natural resources in Southeast Asia – has reportedly begun reaching out to prospective investors for phase two funding.

With the US$ 1 billion it received in starting capital during the first phase wrapped up in companies in Cambodia, Laos, Myanmar, the Philippines, and Thailand; the CAF now aims to raise up to US$ 3 billion in additional funds, and US$ 10 billion over the long haul.

Southeast Asia Investment Strategy

The fund will need every dollar it can get if it’s to support its mission of deepening China’s economic influence within the 10 member-states of the Association of Southeast Asian Nations (ASEAN), which lies at the center of Beijing’s ambitions for bringing the region under its continent-spanning One-Belt One-Road initiative. Introduced in 2013 by China President Xi Jinping, the project envisions a modern-day revival of the Silk Road trade routes that once ran unfettered over land and sea, allowing goods of all kinds to be traded across the regions of ancient world, and which derive their name from the highly lucrative Eurasian silk trade that propelled China into a golden age of economic and diplomatic prosperity.

CAF is one of a handful of quasi-state investment funds created by Beijing over the past decade for the purpose of realizing its vision of global commerce. The much larger, US$ 40 billion Silk Road Fund established in 2014, for instance, focuses on supporting businesses rather than the financing of individual projects. China’s commercial and policy bank – including the China Development Bank (CDB) and Asian Infrastructure Investment Bank (AIIB) – are also heavily involved, having received US$ 82 billion for such projects from the central government. Together, they pump capital into countries all along the Silk Road corridor, from Mongolia to Montenegro.

What the Capital is for?

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SWFI First Read, May 25, 2018

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MedInvestGroup Pushes Investment into Russian High-Tech Oncology Centers

The Russian Direct Investment Fund (RDIF) and Mubadala Investment Company have attracted MedInvestGroup, which manages a network of the PET Technology regional oncology and radiological centers, as a strategic investor in the joint management and development of a network of cancer diagnosis and treatment centers. The deal aims to significantly improve the efficiency of the already functional centers in Podolsk and Balashikha. The corresponding agreement was announced today at the St. Petersburg International Economic Forum.

Southern Satellite City and RDIF Reach a Financing Agreement

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French Industrial Giants Find Opportunity with RDIF

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A number of French industrial companies continue to invest within Russia, finding opportunities within the mega country. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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CPPIB Targets 33% in Emerging Markets by 2025

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The Canada Pension Plan Investment Board (CPPIB) generated a net return after expenses and pension contributions of 11.6% for the fiscal year ended March 31, 2018, versus its reference portfolio of 9.8%. For the reported fiscal year, CPPIB grew its net assets to a new high of C$ 356.1 billion (US$ 277.2 billion), compared to C$ 316.7 from the year previous.

Mark Machin, President and Chief Executive Officer at CPPIB, attributed the performance to the rising tide in public equity markets across most geographies, whose volatility in recent months was buoyed by significant fourth quarter earnings in the fund’s private holdings. Public and private equities, CPPIB’s first and third largest asset classes by exposure at 38.8% and 20.3%, saw estimated returns of 11.4% and 16.1%, respectively. Machin joined CPPIB in 2012 and was moved to the top in June 2016, following the departure of Mark Wiseman. Machin has a knack for the Asian region, being CPPIB’s first president for Asia and also spent nearly 20 years in Asia, working at Goldman Sachs. CPPIB plans to continue heavily investing in the APAC region, along with India.

Emerging Markets

“By 2025, we will invest up to a third of the Fund in emerging markets, which by that time are anticipated to account for 47% of global GDP,” said Machin in his section of the annual report outlining the pension’s updated strategic plan. CPPIB currently has C$ 56.1 billion invested in emerging markets, C$ 22.4 billion of which is wrapped up in China.

Foreign and emerging markets continued to dominate in CPPIB’s private equity investments with returns of 16.0% and 19.5%, compared to 1.8% for their Canadian counterparts. Asia was a standout market for the pensioner, which raised its exposure to private equity deals in the region by nearly 28% from C$ 13.4 billion to 17.1 billion, closed six direct investments worth C$ 1.6 billion, committed C$ 1.7 billion towards eight funds, and completed three secondary transactions for C$ 400 million.

With 275 global transactions completed over the fiscal year, CPPIB’s geographic exposure places 15.1% of its assets at home in Canada, 37.9% in the neighboring United States, 13.2% in continental Europe, 5.6% in the United Kingdom, 3.1% in Australia, and a whopping 20.4% in Asia.

Public Equities

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