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NZ Super’s Expansion Capital Strategy Revealed

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In the latest “How We Invest” white paper from the New Zealand Superannuation Fund (NZ Super), Nathan Tuck and Fiona Mackenzie (she exited NZ Super in 2017) reveal how expansion capital has become an attractive source of meaningful returns since the NZ$ 37.4 billion (US$ 26.8 billion) fund first began deploying capital to such enterprises in 2005.

Strategic Development – Expansion Capital

Defined by the authors as the provision of funds to small and fast-growing domestic companies with established business models, organic revenue growth in excess of 10% per annum, and enterprise values between NZ$ 5 million and NZ$ 100 million, NZ Super’s expansion capital investments have been relatively small, totaling some NZ$ 450 million spread across 9 funds and 47 companies to date. That’s barely over one fifth of the fund’s 5.5 % exposure to private equity as of December 31, 2017. However, many pensions and wealth funds have mandates to invest domestically ranging from the California Public Employees’ Retirement System (CalPERS) backing state businesses private equity program to Saudi Arabia’s Public Investment Fund (PIF) supporting Saudi national enterprises through capital investments.

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Saudi Aramco and PIF See Opportunities in Russia

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Saudi Arabia’s Public Investment Fund (PIF) is currently exploring opportunities within Russia. PIF is working with the Russian Direct Investment Fund (RDIF) on a number of fronts. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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HNA Group Aims to Shrink and Sell

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Chinese conglomerate HNA Group is on a selling spree due to an order from the government in Beijing to scale back on debt. HNA Group joins Anbang Insurance Group and Dalian Wanda Group in deleveraging from global assets, particularly in hotels and real estate. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Central Bank of Hungary Buys Mounds of Gold

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In October, the Central Bank of Hungary (MNB) boosted its gold reserves by 10 times, from 3.1 tons to 31.5 tons. This was revealed on October 16, 2018. The gold acquired by the central bank in October has a holding value of US$ 1.24 billion.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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