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Friday SWFI News Roundup, August 22, 2014

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Panama’s Sovereign Wealth Fund Looks to Hire

Panama’s FAP is looking to hire external fund managers as it prepares mandates in fixed income and equities. The FAP has a dual mandate to stabilize the fiscal budget and build integenerational savings.

View Panama’s SWF Profile and Asset Allocation

JP Morgan Attempts to Reach Upper Echelon in Cash Equities for Sovereign Funds

JP Morgan is reorganizing some of its sales resources and personnel to gain more business in its cash equities area. In London, the bank has beefed up its dedicated equities salesforce to pursue sovereign wealth funds and hedge funds. Christian Kutscher will manage the dedicated equities sales team that will cover European sovereign wealth funds.

Bain Capital Takes 50% Stake in TOMS Shoes

Private equity firm Bain Capital LLC beat out other bids and has agreed to purchase a 50% stake in TOMS Shoes Inc, a U.S. casual footwear company. The transaction price is US$ 625 million including debt. TOMS founder Blake Mycoskie the sole owner will hold half of the company.

OMERS PE Invests in Document Technologies Holdings

OMERS Private Equity, the private equity arm of the Ontario Municipal Employees’ Retirement System, acquired Atlanta-based Document Technologies Holdings (DTI), a provider of legal process outsourcing services. OMERS PE and DTI’s management competed a recapitalization and provided an exit for U.S. private equity firm Harvest Partners. Weil Gotshal & Manges LLP acted as legal counsel for OMERS PE.

Ahmed Ali Attiga May Become Next LIA Chief

Ahmed Ali Attiga has a good chance of being the next chief executive of the Libyan Investment Authority. Attiga worked for the International Finance Corporation in Jordan and comes from a well-known Libyan family that has associations with the former Libyan King Idris. The LIA hired an executive search company to find the next CEO.

Former TD CEO Murdock is the New CEO for Strategic Investment Group

Founder Hilda Ochoa-Brillembourg has stepped down as CEO of Strategic Investment Group. She will stay on as chairwoman of the company. Brian Murdock was named CEO of the company. Brian Murdock was the CEO and Chairman of TD Asset Management. As of June 30, 2014, the Strategic Investment Group had US$ 32.7 billion in assets under management.

Orchid Asia VI Raises US$ 920 Million

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AIMco Extends Loan Increase to Razor Energy

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Calgary-based Razor Energy Corporation, a listed junior oil and gas company, locked in an increase of C$ 15 million regarding its non-revolving term loan facility from the Alberta Investment Management Corporation (AIMCo). [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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SWFI First Read, January 18, 2018

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Celgene Eyes Juno Therapeutics

Celegene Corporation is in discussions to buy Seattle-based Juno Therapeutics. Juno Therapeutics has backers which include the Alaska Permanent Fund Corporation (APFC). Celgene has roughly US$ 12 billion in cash and already has a relationship with Juno Therapeutics.

Auckland International Airport Sells Down Airport Holdings in NQA and Cairns

Perron Investments and The Infrastructure Fund, current investors in North Queensland Airports, which includes Cairns Airport, agreed to acquire Auckland International Airport’s 24.6% stake in the holding entity for A$ 370 million. Perron Investments is the privately-owned investment entity of Australian billionaire Stan Perron.

Pemex and Mitsui in Final Talks on Tula Project

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Apple’s Ginormous Corporate Cash Pile Plans to Come Home

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The positive economic effects of U.S. President Donald Trump’s tax reform have already altered the financial behaviors of major U.S. companies such as Wal-Mart Stores, Apple Inc. and AT&T.

In response to the tax law reform, many American businesses, large-to-small in annual revenues, have issued bonuses, granted awards and signaled plans to increase capital expenditures in the United States. For example, Apple announced plans to give its employees US$ 2,500 each in stock awards. A key section of the new U.S. tax reform law includes a provision for firms to take advantage of a one-time payment of 15.5% on repatriated funds down from the 35% rate.

Initial Plans

With the Dow Jones Industrial Average (DJIA) reaching new highs and the tax reform deal signed into law, Apple revealed they would invest US$ 350 billion into the United States economy over a period of five years, as they repatriate massive piles of money from overseas. The iPhone maker estimates they will payout roughly US$ 38 billion in tax payments from the overseas repatriation – thus shifting back some US$ 245 billion out of the US$ 252.3 billion it has held offshore. Apple also plans to spend an estimated US$ 30 billion in capital expenditures over the next five years, with roughly US$ 10 billion in U.S. data centers, according to the company. Apple has plans for 20,000 more jobs to create. The company that was once led by Steve Jobs had faced substantial criticism in the press over outsourcing its manufacturing to China to avoid paying U.S. taxes and lower manufacturing costs. Many of those facilities in China had labor issues such as environmental concerns, slave-like wages and extremely long work hours.

“We believe deeply in the power of American ingenuity, and we are focusing our investments in areas where we can have a direct impact on job creation and job preparedness,” said Apple CEO Tim Cook in a statement on January 17, 2017. He added, “We have a deep sense of responsibility to give back to our country and the people who help make our success possible.”

Liquid Financials and Fixed Income Changes

The sales growth of the iPhone has been a major factor in the growth in Apple’s cash pile. In 2006, Apple moved to act, forming a subsidiary in Nevada to manage investments, initially starting with around US$ 13 billion to manage. Nevada has no corporate income tax and no capital gains tax. Apple manages its investments through an outfit in Reno, Nevada called Braeburn Capital Inc. (Braeburn is a type of Apple), a subsidiary of Apple. Apple also employs some 40 to 50 external fund managers to handle the massive portfolio, according to sources. Braeburn has tried to reduce money management costs by using more separate accounts, while reducing dependence on money market funds.

As of September 30, 2017, Apple has a large investment portfolio worth an excess of US$ 300 billion, with US$ 194.714 billion in long-term marketable securities. Some US$ 128.645 billion are in current assets, with US$ 20.289 billion in cash and cash equivalents.

Focusing on the investment portfolio, some US$ 152.724 billion is held in corporate securities, with US$ 55.245 billion in U.S. Treasuries. Most of the portfolio is held in fixed income investments, including mortgage-backed securities – generally mandating investments be investment-grade and the avoidance of losing principal. Since 2012, Apple has been hoarding more corporate debt, rivaling some bond funds. Only about US$ 799 million are held in mutual funds (non-money market). Apple is also a major buyer of commercial paper across the globe. For example, the company participated in a US$ 500 million issue of 3-year floating notes from Hyundai Capital Services. The tech giant even uses derivatives to hedge against currency and interest rate movements.

The Old Scheme Ends

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