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Current Sovereign Fund Challenges for Hedge Funds

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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. ]

RDIF and Makara Capital form Technology Company Investment Joint Venture

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The Russian Direct Investment Fund (RDIF) and Singapore-based Makara Capital, a specialist in transaction financing and asset management, signed a deal to form a US$ 200 million joint investment platform to finance breakthrough innovative projects in Russia and Asia. Ali Ijaz Ahmad, the CEO of Makara Capital, is a board director of the Intellectual Property Office of Singapore (IPOS). Ali Ijaz Ahmad served as an adviser to Morgan Stanley and The Carlyle Group. He also had stints at the World bank and Goldman Sachs. Makara Capital was founded in 2005 as a joint venture with Credit Suisse AG and made independent by its founding partners in 2008.

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SVB Financial Group to Acquire Leerink Holdings

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Linking Boston to the San Francisco Bay Area in the world of pharmaceuticals, SVB Financial Group (SVB) announced that it has entered into a merger agreement to acquire Leerink Holdings LLC, the Boston-based parent company of Leerink Partners LLC, an investment bank focused on the healthcare and life science industries. Jeffrey A. Leerink formed Leerink in 1995. Santa Clara, California-based SVB Financial Group is the parent company of Silicon Valley Bank. SVB is big into life sciences and provides services to many healthcare companies and startups.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Digital Currencies Gaining Steam Among Central Banks

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At the Singapore Fintech Festival, International Monetary Fund head Christine Lagarde noted that central banks should consider issuing digital currency, as non-cash payments increased over the years – especially in developed markets. Digital currencies, also known as cryptocurrencies, such as bitcoin have lost tremendous value in recent months. Lagarde is referring to having the central bank issue digital currencies. Lagarde argued that a digital currency would be the liability of the state and not a private company. Saudi Arabia, China, Canada, Sweden, and even Uruguay have tinkered with possibly having digital currencies or some form. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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