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No Keystone: Institutional Investors Lose Big on Canadian Oil Sands

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Canadian oil sands companies have struggled financially, many are cash-strapped, holding off on pursuing projects. The long-term payoff for institutional investors seems distant as global oil prices have plummeted. OPEC plans to meet in June. Saudi Arabia’s Oil Minister Ali Al-Naimi stated that OPEC will not change course even if prices drop to US$ 20 a barrel. Oil sands companies are attempting to wait out low oil prices.

On February 24th, U.S. President Barack Obama vetoed a bill to allow the construction of the Keystone XL oil pipeline. The opposition party Republicans criticized the veto with U.S. House Speaker John Boehner calling the veto a “national embarrassment”. The proposed Keystone pipeline would have moved 800,000 barrels daily from the rugged oil sands of Alberta to refineries and ports on the Gulf coast. This was a significant blow to Canadian oil sands companies and their investors. In a White House press release, Obama states, “I am returning herewith without my approval S. 1, the ‘Keystone XL Pipeline Approval Act.’ Through this bill, the United States Congress attempts to circumvent longstanding and proven processes for determining whether or not building and operating a cross-border pipeline serves the national interest.”

In total, the CPPIB invested over C$ 500 million in Laricina Energy.

Calgary-based Laricina Energy Ltd, an oil sands producer, which raised capital from institutional investors such as the Korea Investment Corporation (KIC) and Canada Pension Plan Investment Board (CPPIB), is closing its Germain commercial demonstration project. [ 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.

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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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