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Current Sovereign Fund Challenges for Hedge Funds

sovereignwealth_transactionsHedge funds have bounced back from the doldrums of the financial crisis. The global hedge fund industry is yearning for capital inflows. With this in mind, it is becoming increasingly vital for hedge funds to understand how sovereign wealth funds operate. Major equity management and investment consulting firms have already developed so-called sovereign wealth fund account teams to handle the extra needs of them.

Not all sovereign funds invest in hedge funds or have a desire to. Newly created sovereign funds or funds that require vast amounts of liquidity shy away from these types of alternatives. As sovereign funds grow in asset size and have the ability to take on more portfolio risk, they usually see hedge funds as a possible asset class.

Hedge funds must come to a realization that receiving money from a SWF is far different than a typical high net worth client, pension fund, or insurance company. If a sovereign fund loses money being managed by a traditional fund manager with a clear defined strategy, it is easier to sell the loss story to the public. Hedge funds bear a risk connotation to them. The media and American political class has done a fantastic job on enhancing that risky black box image of hedge funds. This leads to a possible conclusion that sovereign funds that require less public accountability are also more likely to invest in hedge funds.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

CIC Sells 10% Logicor Stake to Blackstone Fund

The China Investment Corporation (CIC) is selling a 10% stake of in European warehouse firm Logicor Ltd to a real estate fund managed by The Blackstone Group. Furthermore, CIC also hired Blackstone to oversee and manage Logicor’s warehouses and logistic properties portfolio.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Fintech Affirm Raises $200 Million in Series E Led By Singapore’s GIC

Affirm Inc., a financial technology firm which provides instant loans to consumers as an alternative to credit cards for their online shopping, has raised US$ 200 million in a Series E round lead by Singapore’s GIC Private Limited, with participation from Khosla Ventures, Lightspeed Venture Partners, Spark Capital, Caffeinated Capital, and Ribbit Capital. The new infusion of capital brings the San Francisco-based company’s total funding to US$ 450 million and a reported valuation of US$ 2 billion.

The company is founded by Max Levchin, a co-founder of PayPal (part of the PayPal mafia, dubbed by the tech press). Max Levchin is also an advisory board member of the Consumer Financial Protection Bureau (CFSB) in the United States.

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CHANGE: Saudi Arabia to Re-Open Movie Theaters, PIF Inks MoU with AMC

The Saudi Arabian government is ending its 35-year ban on cinemas. Next year, the government will allow cinemas to open. This watershed moment provides opportunities for entertainment companies to invest in Saudi Arabia and the surrounding region.

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