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Obama versus Romney on Sovereign Wealth Funds

How will sovereign wealth funds fair if Republican nominee Mitt Romney wins the 2012 U.S. presidential election? How will they fair under a second term of President Barack Obama? The American President, lobbyists, and policymakers can affect sovereign wealth fund investment performance, asset growth, asset allocation, and public perception. In fact, the President of the United States can give the thumbs up or down on transactions that come under the scope of CFIUS.

Globally, sovereign wealth funds as an investor class has grown past US$ 5 trillion in 2012. It is hard to say what material impact the American President can have on sovereign wealth funds. A major input of growth for commodity-based sovereign funds is the price of energy, the demand for it, and how much is sold in world markets. Current, U.S. energy policy positively contributes to the growth of sovereign funds. Rising U.S. consumption of foreign oil, especially in the Gulf region helps feed into the money pump of Middle Eastern sovereign funds. Granted if the United States slowed down foreign purchases of Gulf oil another country like China would pick up more of the oil being shipped out, but it would have a material impact on demand, thus lowering oil prices.

Obama Impact
February 7, 2008, when Barack Obama was gunning for U.S. president he informed reporters on a flight from New Orleans to Omaha, Nebraska, “I am concerned if these … sovereign wealth funds are motivated by more than just market considerations, and that’s obviously a possibility.” He further added, “If they are buying big chunks of financial institutions and their board(s) of directors influence how credit flows in this country and they may be swayed by political considerations or foreign policy considerations, I think that is … a concern.”

The current Obama administration has been a bit more hawkish on CFIUS, to be fair the scope of CFIUS was expanded in 2007. There have been more notices ever since 2008. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Asian Sovereign Funds Not Slowing Down on Tech Investing

According to data from SWFI’s Sovereign Wealth Fund Transaction Database, Asian sovereign funds invested US$ 6.05 billion directly into companies and assets in the information technology sector from Jan 2017 to November 22, 2017. In a comparable time frame from Jan 2016 to November 22, 2016, this same group of Asian sovereign funds directly invested US$ 5.02 billion in the sector. These are direct investments, not fund commitments or manager allocations.

Asian sovereign funds such as GIC Private Limited, Temasek Holdings and the Korea Investment Corporation (KIC) have demonstrated bullish signals to the technology community over other sectors. GIC and Temasek have also been major investors in the private side of deals, funding a wide range of tech startups, while providing financial firepower in buyout transactions.

Some notable direct tech investments in 2017 by sovereign funds include Meituan-Dianping, SoundCloud, Nets A/S, Visma AS, Turn, Inc. and Vantiv.

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Future Fund Makes a Guardian Out of Former J.P. Morgan ANZ Chair

The Australian government has appointed Robert Priestley – current non-executive chair of J.P Morgan for Australia and New Zealand (ANZ) and a non-executive director of ASX – to serve on the Future Fund Board of Guardians for a five-year term from November 7, 2017. Priestley replaces former Morgan Stanley Australia chief executive Steven J. Harker.

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Associated British Ports Reboots Property Development Arm to Capitalize on Land Bank

Associated British Ports (ABP) – operator of 21 major ports throughout the United Kingdom – has announced a reboot of its ABP Property division, complete with a new team of specialists in commercial development and logistics led by Huw Turner, in order to identify and develop strategically significant locations in its 2,372 acre land bank.

ABP is owned in large part by a consortium of pensions and sovereign funds, including the Canada Pension Plan Investment Board (CPPIB) at 33.88% ownership, OMERS at 30%, Singapore’s GIC Ventures Pte Ltd at 20.00% ownership, and the Kuwait Investment Authority at 10.00% ownership. Large institutional investors such as sovereign funds, pensions, and endowments have slowly increased allocation towards infrastructure over the past six years as an alternative to equities and bonds, according to asset allocation data from SWFI.


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