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Do Sovereign Wealth Funds Need Bankers for Deal Flow?

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Sovereign funds are earning their keep as buyers of assets, competing against private equity funds for lucrative stakes in companies like New China Life and a U.K. mobile company. The competition for attractive, long-term, sustainable companies is fierce. In 2007, sovereign wealth funds owned about US$ 3.5 trillion in assets, and there were far fewer in number. Pre-2004, these public institutional investors were known by dealmakers on Wall Street but significantly unknown by the financial media and general public. In the past, wealth funds frequently procured the use of investment bankers for idea generation and deal flow (and still do today), but the relationship between banker and asset owner has evolved favoring the latter. The push and pull relationship continues to propagate; the needs of investment banking and deals remain, but the level of trust vacillates. In this story, we have selected Goldman Sachs to analyze for multiple reasons. First, Goldman typifies the ideal investment bank to many in the industry. The bank has a reputation for getting deals and getting paid massive amounts of money. Analyzing multiple sources of data, including our own, the investment bank year-to-date is the top fee generator in the area of mergers & acquisitions. Trailing behind is JP Morgan, Bank of America Merrill Lynch, Morgan Stanley, Deutsche Bank and Citi when it comes to fees and M&A.

Has Goldman Sachs investment banking lost out to competitors when it comes to dealing with sovereign funds?

Inside Goldman Sachs

Former Goldman Sachs co-Chair John Whitehead (passed away in 2015) wrote his 10 commandments. One of this commandments was “Important people like to deal with other important people. Are you one?”

This highlights the culture of Goldman Sachs. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Saudi Arabia Sends Second Installment of Aid to Pakistan

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On December 14, 2018, Pakistan received its second installment of the US$ 3 billion in aid promised from Saudi Arabia on October 23, 2018. The US$ 1 billion given on December 14th boosted the foreign reserves of the State Bank of Pakistan, which went from US$ 7.2 billion to US$ 8.2 billion. The first installment was given on November 23, 2018. The last installment is expected to occur in January 2019.

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White House Nominates Heath Tarbert for CFTC Chairman

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The White House announced Heath P. Tarbert will be nominated to serve as Commissioner and Chairman of the Commodity Futures Trading Commission (CFTC). Tarbert currently serves as Assistant Secretary for International Markets at the U.S. Treasury Department. Before joining the U.S. Treasury, Tarbert was a Partner at law firm Allen & Overy. Tarbert was confirmed by the U.S. Senate for his current Treasury post at 87 (yes) to 8 (no).

Upon Senate confirmation, Tarbert’s CFTC term would start on April 14, 2019 and last for five years. Tarbert is taking over from J. Christopher Giancarlo whose term ends in April 2019. Tarbert will need a U.S. Senate confirmation to take the head CFTC post.

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KIA Could Sell Stake in North Sea Energy Business

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The Kuwait Investment Authority (KIA), through its unit Wren House Investment Management, is nearing a deal to sell a 40% stake in its North Sea energy business to JPMorgan Asset Management. In July 2018, KIA closed on a deal to acquire oil and gas pipeline firm North Sea Midstream Partners from ArcLight Capital.

More details to follow –

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