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France’s FSI seeks to create co-investment platform with other SWFs

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By Alexia Wai-Chun Tye

Guest Contributor

Whilst the FSI’s newly appointed CEO Jean-Yves Gilet has yet to take up his position after the summer lull, the President of the Board, Augustin de Romanet, has been speaking publicly on a variety of issues facing the FSI and its 51% controlling shareholder, the state institution Caisse des Dépôts (“CDC”).

A frequently asked question concerns the financial resources of the FSI and its longer term future.  With the double threat of new prudential regulations Basel III and Solvency II that will soon come into force, de Romanet sees a shrinking of the traditional sources of funding for fast-growing, innovative companies, acting alongside the FSI and CDC.  In the medium term FSI will need further capital injections in order to ensure that promising French companies receive the support they need.  In the shorter term, de Romanet sees the solution coming from long term international investors, including in particular sovereign wealth funds, co-investing alongside the FSI and its parent CDC.  He also mentioned soliciting investors from Singapore, Malaysia and Kuwait. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

This article will appear in the Sovereign Wealth Quarterly Q3Y2010.

The views, opinions, positions or strategies expressed by guest contributors and those providing comments are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of the Sovereign Wealth Fund Institute or any employee thereof.

Chinese Stock Picker Raises $10 Billion in Half a Day

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Chen Guangming, a former star portfolio manager at Orient Securities Asset Management Company Limited, started Shanghai-based Foresight Fund. Despite the Chinese stock market crash of 2015 still being an imprinted memory, Foresight Fund ceased receiving client subscriptions in its fund after going well beyond its 6 billion RMB fundraising target. According to news sources, the money was raised in less than half a day. The company allegedly raised more than 70 billion RMB (US$ 10 billion) for its mutual fund called the Ruiyuan Fund. Roughly 20 billion RMB was from China Merchant Bank Company’s fund distribution platform.

Chen Guangming generated big returns at his old employer. Orient Securities Asset Management Company is owned by Orient Securities Co., Ltd., also known as DFZQ. Chen Guangming is the former Chairman of Dongzheng Asset Management and personally oversaw Dongfanghong No. 4. from its inception in 2009 to the end of 2017.

Foresight Fund is cautiously optimistic on China, still seeing growth. In a local news story from Sina, Chen Guangming China’s growth is estimated t be less than 6%, but compares it to the U.S. whose GDP never exceeded 10%, but has experienced high growth in its stock market.

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China SWF Launches Fund with BNP Paribas and Eurazeo

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Eurazeo will manage a bilateral investment fund backed by the China Investment Corporation (CIC) and BNP Paribas to support French and European companies seeking to expand rapidly in China. The fund will be €1 billion to €1.5 billion in size. CIC, BNP Paribas, and Eurazeo, will invest significantly in the fund alongside additional investment limited partners. With a presence in China since 2013, Eurazeo will be responsible for managing the fund, as well as choosing and managing the investments.

The CIC has formed bilateral funds with private entities. CIC has a bilateral fund with Goldman Sachs Group.

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Petrobras to Spend $320 Million to Hedge Portion of Oil Production

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Revealed on March 22, 2019, Petroleo Brasileiro SA (Petrobras) spent US$ 320 million on put options as a hedge. Brazil’s state-owned oil company bought the options to hedge part of its crude production for 2019. This is at an equivalent of US$ 60 per Brent oil barrel. The options will expire by the end of 2019.

The put options enable Petrobras to deliver oil at US$ 60 per barrel, but not the obligation to do so.

In a securities filing, Petrobras said, “The strategy is to hedge the export operations expected for the year, that way partially protecting the company’s operational cash flow.”

To compare to 2018, Petrobras is spending less on options in 2019. Petrobras had put options at US$ 65 a barrel, covering 128 million barrels.

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