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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. ]

Mergermarket Gets Ready to be Sold

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Private equity firm BC Partners hired Goldman Sachs Group Inc. and JPMorgan Chase & Co. to advise on the sales of Acuris. Acuris is a collection of financial news and data sites, which includes Mergermarket, Dealreporter, and Debtwire. In 2017, BC Partners sold around a 30% stake in GIC Private Limited.

Before the rebranding to Acuris, Mergermarket was part of The Financial Times Group until 2013 when it was sold off to BC Partners.

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Why Japan Post Sees Promise in Aflac

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Aflac Inc. is an American insurance company founded in 1955. The company is the biggest provider of supplemental insurance in the United States. Aflac also has major operations in Japan.

In December 2018, Japan Post Holdings (JPHLF) signaled it was spending US$ 2.64 billion for a 7-8 % stake in Aflac. The goal is that, in four years time, Aflac will become an affiliate of Japan Post. Japan Post hopes to accomplish this by becoming the largest voting shareholder of the company. The world’s 13th largest company, with 400,000 employees, Japan Post needs to expand to chase further growth, mainly because Japan Post expects the postal business to decline. Diversification is seen as the optimal route to long term stability for the holding company. Japan’s economy is worrying. Japan’s aging population means that many insurance companies are facing a shrinking customer base, Japan Post settled on a plan to expand overseas.

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

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RDIF and Development Agency of Serbia Agree to Explore Joint Investments

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The Russian Direct Investment Fund (RDIF) and the Development Agency of Serbia, also known as Razvojna agencija Srbije, reached an agreement to work together to identify attractive investment projects to strengthen bilateral economic ties and increase investment flows between Russia and Serbia. Russian capital and businesses are keen on investing in Serbia.

In addition, the two countries signed an agreement to cooperate on civil nuclear energy, according to state-owned Russian reactor builder Rosatom (Rosatom State Nuclear Energy Corporation). Rosatom continues to expand it business of nuclear cooperation deals in a wide number of countries.

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