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Loose Money Forces Sovereign Wealth Funds into Alternatives

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Institutional investors like sovereign wealth funds, superannuation funds and public pensions are riding high on the equity market rallies of 2013. Financial media and conference companies have awarded top performance to a number of chief investment officers – CIO of the year is [fill in the blank.] When will the music stop playing and the doomsayers be correct? Will there be a major market pullback in the middle of 2014? To counter a possible drop in public equities, sovereign funds are allocating capital to real estate funds and/or buying core real estate directly. This trend is clearly evident just by witnessing Norway’s sovereign fund pick up ownership stakes in core assets in New York, Boston, Munich, Paris and London. Just in December, Norges Bank Investment Management inked a deal with Metlife to create a massive U.S. real estate platform targeting Class A office properties.

In addition, private equity raises continue to increase in frequency with larger fund commitments from public asset owners. Since 2009, fundraising has grown year over year, even when private equity funds are lying on lofty chunks of investor capital – waiting for deal opportunities. The target-rich environment from 2009 to 2011 for Western distressed assets has shrunk.

The opiate-like consequences are apparent, long-term asset owners are being forced to purchase riskier assets – enabling 2006 feelings of risk tolerance.

According to research from the Sovereign Wealth Fund Institute, more wealth funds are augmenting asset allocation toward real assets and private equity. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

CIC Sells 10% Logicor Stake to Blackstone Fund

The China Investment Corporation (CIC) is selling a 10% stake of in European warehouse firm Logicor Ltd to a real estate fund managed by The Blackstone Group. Furthermore, CIC also hired Blackstone to oversee and manage Logicor’s warehouses and logistic properties portfolio.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Fintech Affirm Raises $200 Million in Series E Led By Singapore’s GIC

Affirm Inc., a financial technology firm which provides instant loans to consumers as an alternative to credit cards for their online shopping, has raised US$ 200 million in a Series E round lead by Singapore’s GIC Private Limited, with participation from Khosla Ventures, Lightspeed Venture Partners, Spark Capital, Caffeinated Capital, and Ribbit Capital. The new infusion of capital brings the San Francisco-based company’s total funding to US$ 450 million and a reported valuation of US$ 2 billion.

The company is founded by Max Levchin, a co-founder of PayPal (part of the PayPal mafia, dubbed by the tech press). Max Levchin is also an advisory board member of the Consumer Financial Protection Bureau (CFSB) in the United States.

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

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CHANGE: Saudi Arabia to Re-Open Movie Theaters, PIF Inks MoU with AMC

The Saudi Arabian government is ending its 35-year ban on cinemas. Next year, the government will allow cinemas to open. This watershed moment provides opportunities for entertainment companies to invest in Saudi Arabia and the surrounding region.

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