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HNA Group Has Ambitions for an Asset Management Empire

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HNA Group is an expanding Chinese conglomerate that has been on an overseas spending spree, armed with roughly US$ 145 billion in assets. HNA Capital, the financial services business of HNA Group, is keen on building a global asset management business.

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New York-based HNA Capital U.S., a subsidiary of HNA Capital, has agreed to buy a 24.95% stake in U.S.-based OM Asset Management, a unit of U.K.-based Old Mutual plc. OM Asset Management, as of December 31, 2016, had £395 billion of funds under management. HNA Capital is paying US$ 446 million for the stake in the asset management unit. Per deal terms, Old Mutual’s stake in OM Asset Management is being reduced from 51% down to 26%. In addition, HNA Capital will be given two board seats on OM Asset Management. HNA Group beat out two other rivals in the deal which include private equity firm TPG Capital and Advent International.

Deal Details

This transaction is taking part in two price tranches. Old Mutual is selling shares in OM Asset Management first at US$ 15.30 per share (9.95% ownership stake), and then for US$ 15.75 per share (15% ownership stake) – each slight premiums to a set price date. PJT Partners was the financial advisor for HNA Group on the deal, while Bank of America Merrill Lynch and Evercore had advised Old Mutual. Skadden Arps and Linklaters served as legal advisors to Old Mutual in connection with the transaction. In December 2016, Old Mutual, in the open market, sold down its ownership from 66% to 51%.

Ambitions

This is HNA Group’s second overseas foray into asset management companies, bypassing the Fortress deal in which Japan-based SoftBank Group had bought out. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

China’s Central Bank Creates Macro-Prudential Management Bureau

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The People’s Bank of China (PBOC) created a new department to oversee and attempt to eliminate financial risks to the system. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Like its U.S. Peers, Legg Mason Seeks to Trim Costs

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Legg Mason Inc., a Baltimore-based asset manager, has announced a reduction in workforce as is prepares to streamline operations and save money. Legg Mason’s leadership commented that assets under management fell 5 % year-on-year. Legg Mason currently manages US$ 727.2 billion (as of December 31, 2018), which is down from the previous US$ 767.2 billion. CEO Joseph A. Sullivan noted that a global operating platform will centralize fund administration, IT, and other departments that work with affiliates. Sullivan did not discuss the number of layoffs expected, or specify which areas would be impacted. Legg Mason disclosed they planned to close a quarter of its exchange-traded funds in March 2019. These three ETFs include a U.S. strategy, emerging markets, and a developed markets strategy outside the U.S. However, these funds run around US$ 28 million in assets under management.

[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Monetary Authority of Singapore Establishes Corporate Governance Advisory Committee

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On February 12, 2019, the Monetary Authority of Singapore (MAS) revealed the creation of a Corporate Governance Advisory Committee (CGAC). CGAC was formed to advocate for good corporate governance practices among listed companies in Singapore. Bobby Chin, Director of Singapore Telecommunications Limited, will be the Chair of CGAC. According to a MAS press release, “CGAC will identify current and potential risks to the quality of corporate governance in Singapore.”

MAS formed the Corporate Governance Council (Council) in February 2017. The Council was dissolved after it pushed out a publication of its final recommendations on August 6, 2018.

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