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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. ]

SWFI First Read, September 21, 2018

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U.S. Public Becomes More Aware that Gmail Scans Emails

Alphabet is a major stock holding for sovereign wealth funds and large pensions. Search giant Google is under fire for allowing third-party partners and companies, like Return Path Inc and other advertisers, to share data from Gmail accounts. Many experts and tech observers already knew this, but more people in the public are becoming aware of Google’s practices when it comes to privacy. Google disclosed in a letter to U.S. lawmakers this finding. The Wall Street Journal reported that in some instances, app companies were able to read people’s emails in order to improve their algorithms. In 2017, Google said they would stop scanning all of one’s Gmail messages for the goal of personalized ads.

GPIF Infrastructure Exposure Almost Reached 200 Billion Yen in March 2018

Japan Government Pension Investment Fund’s (GPIF) exposure to infrastructure real estate was 196.8 billion JPY at the end of March 2018. At that period, 57% of the exposure was to the UK, 15% was to Australia, 15% to Sweden, 10% to Spain and 3% to Finland. 21% of GPIF’s infrastructure portfolio was linked to airports versus 27% to ports.

AIMCo-backed sPower Closes $498.7 Million Bond Deal

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Iceland Contemplates a Sovereign Wealth Fund

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The Government of Iceland is looking to possibly form a sovereign wealth fund to stabilize the country from unforeseen shocks to the national economy. The Iceland government released a statement saying, “The state’s contributions to the Fund will be equivalent to new revenues from publicly owned power production companies which are expected to accrue in the coming years.”

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CBRE Global Wins First GPIF Global Real Estate Mandate

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Japan Government Pension Investment Fund (GPIF) awarded its first global real estate mandate by hiring CBRE Global Investment Partners Limited. This is a global core real estate fund-of-funds separate account. Overseeing this mandate as a gatekeeper is Asset Management One Co., Ltd., which is a unit of Mizuho Financial Group. This RFP was launched in April 2017.

CBRE Global Investment Partners is the multi-manager arm of CBRE Global Investors.

In addition, on August 8, 2018, GPIF hired two custodians for short-term investments. These custodians are Trust & Custody Services Bank, Ltd and The Master Trust Bank of Japan, Ltd.

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