Connect with us

Mainland China Experiencing Slowdown in Wealth Fund Direct Deals

Published

on

With China experiencing a deceleration in economic growth, heightened geopolitical tensions, and rising risks in the country’s traditional financial sector, wealth fund direct investments have slowed down to a crawl in 2016 compared to 2015.

Direct Transactions into Mainland China by Sovereign Wealth Funds – Billions USD

Source: Sovereign Wealth Fund Transaction Database, Extracted February 7, 2017.

Source: Sovereign Wealth Fund Transaction Database, Extracted February 7, 2017.

Even though there is an abundance of institutional investor capital chasing deals globally, the number of suitable opportunities for these large sovereign investors within China shrunk, as well as deal size. This had required both cash-rich wealth funds and pensions to augment on-the-ground resources across Asia. In reality, overseas wealth funds, at times, are competing against adventurous Canadian pensions, deep-pocketed corporate investors, private equity firms and domestic players when it comes to investing in Chinese emerging companies. Lucrative Chinese initial public offerings are competitive.

While overall direct deals made by wealth funds slightly pulled back in 2016, mainland China suffered a significant reduction in incoming direct sovereign investor capital. According to data from the Sovereign Wealth Fund Transaction Database (SWFTD), wealth funds directly invested US$ 4.05 billion in mainland China in 2016 versus US$ 13.16 billion in 2015. In 2014, the figure was US$ 8.096. The United States was a beneficiary for 2016 when it came to direct sovereign fund transactions. However, according to SWFI Compass, an RFP and opportunity tracking service, external fund mandates toward mainland China were in demand by both wealth funds and pensions across the United States.

Realignment

Wealth funds are also realigning their Asia portfolios, seeking to lower exposure toward traditional financial institutions, while trying to identify investments in China’s consumer, technology and real estate sectors. In 2015, HIP China Logistics Investments Ltd., a sovereign wealth enterprise of the Abu Dhabi Investment Council (ADIC), kicked in US$ 750 million more toward its joint venture with Prologis Inc. called Prologis China Logistics Venture. Meanwhile, some sovereign funds were selling bank stocks. For example, in early 2017, according to Hong Kong filings, Qatar Investment Authority (QIA) trimmed 3.84 million H shares of Agricultural Bank of China Ltd. The shares were sold at an average price of HK$ 3.26 per share on January 27, 2017. Post-transaction, the QIA has a 11.99% stake in the Agricultural Bank of China from its previous 12% ownership stake.

Despite these headwinds, mainland China is on track to have more initial public offerings from very large Chinese companies. One example is China Reading (also known as Yuewen Group), China’s biggest online publishing and e-book company. China Reading, which is backed by Chinese giant Tencent Holdings, hopes to raise up to US$ 800 million in a 2017 IPO.

Korea’s NPS Invests In Crypto Exchanges Amid Crackdown

Published

on

South Korean news outlets have reported that South Korea’s National Pension Service (NPS) has unwittingly invested roughly US$ 2.4 million in four local cryptocurrency exchanges – Korbit, Upbit, Coinplug, and Bithumb – even as regulatory officials move to subdue the unbridled enthusiasm for crypto trading that has flourished in the tiny country. The US$ 550 billion pension scheme invested in the cryptocurrency exchanges indirectly through two venture capital funds handled by external managers with exclusive rights over asset allocation, according to an NPS officer.

Crypto trading has proved wildly popular in South Korea, drawing an estimated one million citizens to the largely unregulated exchanges that have cropped up over the past few years. South Korea, which is ranked first in the world in terms of internet sped, is the largest market for cryptocurrency transactions behind Japan and United States, and accounts for 29.8% of trade globally, according to a report released by the Korea Insurance Research Institute (KIRI) in December 2017.

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

Continue Reading

Ripple Attempts to go the Central Bank Route

Published

on

San Francisco-based Ripple, a tech company that professes the use of blockchain to reboot the payment systems globally, landed a big deal with the Saudi Arabian Monetary Authority (SAMA). Ripple started a pilot program that will be spearheaded by SAMA and a few Saudi banks to deploy xCurrent for cross-border payments. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Continue Reading

Investment Corporation of Dubai Eyes $1 Billion Loan Deal

Published

on

The Investment Corporation of Dubai (ICD) plans to raise US$ 1 billion in a loan to refinance existing debt. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Continue Reading

Popular

© 2008-2018 Sovereign Wealth Fund Institute. All Rights Reserved. Sovereign Wealth Fund Institute ® and SWFI® are registered trademarks of the Sovereign Wealth Fund Institute. Other third-party content, logos and trademarks are owned by their perspective entities and used for informational purposes only. No affiliation or endorsement, express or implied, is provided by their use. All material subject to strictly enforced copyright laws. Registration on or use of this site constitutes acceptance of our terms of use agreement which includes our privacy policy. Sovereign Wealth Fund Institute (SWFI) is a global organization designed to study sovereign wealth funds, pensions, endowments, superannuation funds, family offices, central banks and other long-term institutional investors in the areas of investing, asset allocation, risk, governance, economics, policy, trade and other relevant issues. SWFI facilitates sovereign fund, pension, endowment, superannuation fund and central bank events around the world. SWFI is a minority-owned organization.