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Institutional Investors Experience Bifurcation of Chinese Private Equity

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Private equity in Asia, let alone China, continues to boom. Some institutional investors such as Singaporean sovereign wealth funds go direct into mainland Chinese investments, while many asset owners navigate a complex environment and allocate capital to Chinese private equity funds. These direct investors are operating in an economy where some industries are buffered from the impact of the ongoing U.S.-China trade tariff conflict.

Media, Consumer Products, Healthcare, and Technology

Chinese private equity firms focused on domestic consumption appear to be less impacted compared to funds that have allocations toward traditional industries like real estate, materials, and textiles. This facile comparison is being interpreted through Chinese consumer technology companies exiting for public listings. On October 2, 2018, Tencent Music Entertainment Group filed to go public in the United States. Tencent Music is China’s largest music streaming company, which is part of Chinese giant Tencent Holdings Limited. Tencent Music was formed when Tencent acquired a controlling ownership stake in China Music Corporation and merged it with Tencent’s existing streaming business. Spotify Technology SA, another music streaming service, completed a direct listing in April 2018. Private capital is waiting to access these companies. For example, the nearly US$ 100 billion SoftBank Vision Fund, is seeking a roughly US$ 500 million investment in Zuoyebang, a Chinese online education platform. These Chinese consumer-facing companies are utilizing the strength of mainland Chinese markets to fuel global ambitions to markets such as Singapore, Malaysia, Indonesia, and Vietnam. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

GIC Buys Large Stake in Nordic Aviation Capital

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Singapore’s GIC Private Limited, a yield-hungry sovereign investor, invested in Denmark-based Nordic Aviation Capital A/S, becoming a significant minority shareholder. Other shareholders in Nordic Aviation Capital include EQT VI Limited fund, KIRKBI Invest (wealth origins tied to Legos), and Martin Møller, the founder of Nordic Aviation Capital. EQT VI will remain the largest shareholder of Nordic Aviation Capital. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Trump Wants Pharma Companies to Disclose Drug Prices in Advertisements

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U.S. President Trump is progressing on plans to mandate pharmaceutical companies to reveal their prices in drug advertisements. “The drug industry remains resistant to providing real transparency around their prices, including the sky-high list prices that many patients pay,” Health and Human Services Secretary Alex Azar said in a statement. “So while the pharmaceutical industry’s action today is a small step in the right direction, we will go further.”

The U.S. Health and Human Services Department would require pharmaceutical companies to include drugs’ sticker prices in their video advertisements. This would be similar to how drug companies disclose the laundry list of side effects.

Increasingly, sovereign funds like Temasek Holdings have backed mid-stage pharmaceutical companies and other therapies, while market investors like Norway’s GPFG have large holdings in listed pharmaceutical companies.

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Kazatomprom Treads Closer to IPO

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Kazatomprom is the world’s biggest uranium producer, accounting for around 20% of production market share. The company is moving forward on floating up to a 25% company stake for its planned initial public offering in London and Astana, Kazakhstan. Kazatomprom’s IPO plans are subject to market conditions. The global market price of uranium generated significant price gains year-to-date through almost three quarters. So far, during 2018, the uranium spot price has moved from US$ 20 per pound to US$ 27 per pound.

Kazatomprom’s sole shareholder is Samruk-Kazyna. Samruk-Kazyna would retain at least a 75% stake in the company.

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Credit Suisse and JPMorgan are joint global coordinators and joint bookrunners for the share offering. China International Capital Corporation, Halyk Finance, and Mizuho International plc were joint bookrunners.

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