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Could SoftBank Challenge the Dominance of Blackstone?

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Japan’s SoftBank Group Corporation has agreed to buy New York-based Fortress Investment Group LLC for approximately US$ 3.3 billion in cash in a bid to further cement the firm’s ascension into the lucrative world of money management. Fees are the revenue drivers for investment managers. The deal worked out that SoftBank would pay US$ 8.08 per share of Fortress Investment Group, a 38.6% market premium to the firm’s February 13, 2017 closing stock price. The money is not coming out of the SoftBank Vision Fund to fund the deal. Getting into the world of alternative investments, SoftBank can challenge the dominance of firms such as The Blackstone Group and Carlyle Group, as the conglomerate is now in control of hedge fund, credit, private capital and fixed income businesses. Fortress Investment Group had US$ 70.1 billion in assets under management as of September 30, 2016. SoftBank will also get control of Logan Circle Partners, a fixed income shop within Fortress Investment Group, which accounts for US$ 33.4 billion in assets under management.

Deal Flow

The Founder, Chairman and CEO of SoftBank is Masayoshi Son and he is known for being a direct investor, putting capital to work in e-commerce ventures, internet startups, designers and telecommunication businesses. Recent examples include investments in U.K. chip designer ARM Holdings Plc and satellite company OneWeb Ltd. Son, one of Japan’s richest men, has also realized that asset management and building up sources of committed capital can enhance opportunities. Son sees more wealth funds, pensions and endowments moving money into private equity and other illiquid asset classes, while many private equity firms struggle with deal flow. For example, Boston-based Massachusetts Pension Reserves Investment Management Board (MassPRIM), in a recent board meeting approved to increase its allocation to private equity from 10% to 11%, citing top performance in this asset class.

Almost always, private equity firms without sufficient access are challenged when trying to deploy limited partner capital. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

SWFI First Read, September 21, 2018

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U.S. Public Becomes More Aware that Gmail Scans Emails

Alphabet is a major stock holding for sovereign wealth funds and large pensions. Search giant Google is under fire for allowing third-party partners and companies, like Return Path Inc and other advertisers, to share data from Gmail accounts. Many experts and tech observers already knew this, but more people in the public are becoming aware of Google’s practices when it comes to privacy. Google disclosed in a letter to U.S. lawmakers this finding. The Wall Street Journal reported that in some instances, app companies were able to read people’s emails in order to improve their algorithms. In 2017, Google said they would stop scanning all of one’s Gmail messages for the goal of personalized ads.

GPIF Infrastructure Exposure Almost Reached 200 Billion Yen in March 2018

Japan Government Pension Investment Fund’s (GPIF) exposure to infrastructure real estate was 196.8 billion JPY at the end of March 2018. At that period, 57% of the exposure was to the UK, 15% was to Australia, 15% to Sweden, 10% to Spain and 3% to Finland. 21% of GPIF’s infrastructure portfolio was linked to airports versus 27% to ports.

AIMCo-backed sPower Closes $498.7 Million Bond Deal

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Iceland Contemplates a Sovereign Wealth Fund

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The Government of Iceland is looking to possibly form a sovereign wealth fund to stabilize the country from unforeseen shocks to the national economy. The Iceland government released a statement saying, “The state’s contributions to the Fund will be equivalent to new revenues from publicly owned power production companies which are expected to accrue in the coming years.”

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CBRE Global Wins First GPIF Global Real Estate Mandate

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Japan Government Pension Investment Fund (GPIF) awarded its first global real estate mandate by hiring CBRE Global Investment Partners Limited. This is a global core real estate fund-of-funds separate account. Overseeing this mandate as a gatekeeper is Asset Management One Co., Ltd., which is a unit of Mizuho Financial Group. This RFP was launched in April 2017.

CBRE Global Investment Partners is the multi-manager arm of CBRE Global Investors.

In addition, on August 8, 2018, GPIF hired two custodians for short-term investments. These custodians are Trust & Custody Services Bank, Ltd and The Master Trust Bank of Japan, Ltd.

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