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CPPIB to Become First Major Pension to Issue Green Bonds

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On the back of the G-7 summit in Quebec, the Canada Pension Plan Investment Board (CPPIB) announced plans to issue green bonds dedicated to generating funds for investment in wind and solar power, sustainable water and waste management, and energy-efficient buildings, making it the first large public pension fund to sell debt securities for the backing of eco-friendly projects.
The AAA-rated fund’s statement said the inaugural bonds will be denominated in Canadian dollars and issued on a private placement basis to certain qualified accredited investors, but did not specify when the sale would take place or how much would be on offer.

Increasingly Canadian pensions such as PSP Investments, CDPQ and CPPIB have been snapping up renewable energy plants, whether in wind or solar, across North America and in some instances in Europe and Latin America.

“The issuance of green bonds is a logical next step to CPPIB’s investment-focused approach to climate change, and we are pleased to be a pioneer among pension funds in this regards,” said Poul Winslow, senior managing director and global head of capital markets and factor investing at CPPIB.

Green Bonds in Asia

Hundreds of billions could be raised over the next five years in green bonds by Asian entities, according to SWFI calculations. In June, the International Finance Corporation (IFC) and the Monetary Authority of Singapore (MAS) signed a Memorandum of Understanding (MOU), agreeing to work together to accelerate the growth of green bond markets in Asia. The MoU aims to promote internationally-recognized green bond standards and frameworks. The Hong Kong Monetary Authority (HKMA) revealed that between January 2018 and May 2018, the Hong Kong as a city issued HK$ 39 billion worth of green bonds. In May, the Bank of China raised a US$ 1 billion green bond issue. Swire Properties and Beijing Capital Group each raised US$ 500 million in green bonds.

Think Tanks Reveal Needs

Annual issuance of the environmentally friendly securities reached US$ 155 billion in 2017, a 78% increase over the year previous, and is expected to reach US$ 1 trillion by 2020, according to the Climate Bonds Initiative. The Climate Bonds Initiative is financially majority-backed by the Rockefeller Foundation, Bank of America, National Australia Bank (NAB), Bloomberg Philanthropies and the Swiss government.

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Crown Property Bureau Moves Assets to Thailand King Under 2017 Law

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In December 2016, Crown Prince Maha Vajiralongkorn became King of Thailand, succeeding his father King Bhumibol Adulyadej who passed away in October 2016. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Three Successful Traits in Asset Management CEOs

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by Michael Maduell

In my frequent and vast interactions with chief executives of small-to-large asset management firms, I’ve witnessed a number of traits that successful firms – meaning growing and retaining assets under management plus getting real respect in the industry – are able to properly execute. Besides generating amazing returns and matching the right solutions for the asset owner clients, CEOs need to be advancing their firms. Of course, quality client service should remain front of mind for fund management firms. In this short piece, I will focus on three traits that successful fund managers tend to possess.

1. Abundant Charisma from Founders
What is memorable and what will stick in one’s mind? A cadre of asset managers possess charismatic chief executives. BlackRock’s Larry Fink, DoubleLine’s Gundlach and Rajiv Jain of GQG Partners are some prime examples that come to mind. DoubleLine is a relatively new player compared to BlackRock and already amassed over US$ 100 billion in assets. Being a founder of the fund management company also helps, as CEO hires (often bringing a book-of-business contacts) may tend to look elsewhere unless generously compensated.

Having an effective cheerleader CEO is essential in nurturing and growing a sustainable franchise in a monochromatic industry of imitators. Too often, CEOs of some asset management firms are pure “salespeople” – too pushy or fake, or a highly-bright number-cruncher with low or nil emotional intelligence.

2. Not Drinking Too Much of One’s Own Kool-Aid
“We are a data-driven, technology, ESG-focused, smart-beta, solutions-led provider of services.” Hey, 2018 did I get that right?

Yes, your stuff does not stink. Like a broken clock, many CEOs rely on the flavor of the year or grappling a playbook, beating the idea over the heads of pensions and sovereign fund clients and prospects. In the long-run – meaning maintaining assets over a lengthy period of time – I find it’s better to be more objective when discussing potential strategies. I’m talking about a healthy dose of informative marketing. However, being overly-transparent or even talking yourself out of the strategy is not what I am directly advocating. It is important to be realistic about the strategy or thematic idea, as the attractiveness of these concepts shift over time.

3. Stirring up Controversy – Strategically
Shaking the tree and stirring the pot – this trait can surely backfire if not properly executed. Being the brightest crayon in the box can work. Even virtue signaling – latching onto a social current – can work in some instances, but CEOs that can deliver impactful counter-culture statements that shock the conscience tend to draw attention – and capital. This might not be the best example; however, upon the ascendancy of Abraaj Group, the firm’s founder, Arif Naqvi, often commented to not describe countries like China, India, etc. as emerging markets but as global growth markets – then creating a comparison to Wall Street and its risks. Abraaj was able to raise a ton of capital, before its downfall stemming from early 2018.

Boards need to diligently examine the CEOs they select. Does the firm want to grow or hold the line for the planned dividend? My belief is that if you are not growing, you are decaying, as the world moves faster and faster.

The views in this article are expressed by Michael Maduell.
Michael Maduell is President of SWFI.
www.swfinstitute.org

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SWFI First Read, June 16, 2018

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State Street Names Maria Cantillon for Head of Sectors Solutions, EMEA

State Street named Maria Cantillon as head of sectors solutions for Europe, Middle East and Africa (EMEA). She will report to Liz Nolan, CEO of EMEA at State Street. Cantillon replaces Joerg Ambrosius who moved to another role at the firm. Previously, Cantillon was Global Head of Alternative Asset Manager Solutions at State Street.

Theranos Founder Elizabeth Holmes and Ramesh Balwani Face Federal Charges

Elizabeth Holmes, the founder of blood-testing company Theranos, is facing federal fraud charges. Also facing charges is Ramesh “Sunny” Balwani. Both individuals were indicted on charges that they engaged in schemes to defraud investors, doctors and patients, according to the U.S. Department of Justice (DOJ). They both face two counts of conspiracy to commit wire fraud and nine counts of wire fraud. These criminal charges were levied after Holmes had settled civil fraud charges initiated by the U.S. Securities and Exchange Commission (SEC).

Russian Investors Chopped Treasury Holdings in April

Revealed in a report from the U.S. Treasury, Russian investors dropped U.S. Treasury holdings in March 2018 from US$ 96.1 billion to US$ 48.7 billion in April 2018. Before March 2018, U.S. Treasury holdings by Russian investors remained steady in the US$ 100 billion range.

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