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Potential Perils of Single Issues for Norway’s Sovereign Wealth Fund

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Montalban Founder Dag Dyrdal, an advisor to financial institutions and corporations, wrote a column in Norwegian newspaper Dagens Naeringsliv titled, “The Oil Fund as a Political Activist” (translated) on May 27, 2015. From 2009 to 2012, Dyrdal was Chief Strategic Relations Officer and a member of the executive management team at Norges Bank Investment Management (NBIM), the manager of Norway’s wealth fund. His article highlights the growing debates and possible usage of Norway’s enormous prized treasure, its nearly US$ 900 billion sovereign wealth fund, as a political instrument to fulfill a myriad of single-issue agendas.

The risk of having a number of single-issues drive the investment process of a sovereign wealth fund invested in hundreds of markets can create a host of problems.

Single Issues

Norway is not the only country susceptible to politicians who view a pile of cash as their means to fulfill political purposes. In fact, many Western countries that have longer webs of special interest groups, have trouble forming savings vehicles that top the half trillion dollar mark without strict governance rules and checks.

Dag Dyrdal

Dag Dyrdal

Dyrdal writes: “The Environmental Party considers the fund a climate policy instrument. The Centre Party wants to split up the fund and decentralise management across Norway. While in opposition, The Progress Party wanted to use the fund as a lever for increased infrastructure investments in Norway, while the Christian Democrats and the Liberals on several occasions have wanted more development-oriented and green investments.”

The risk of having a number of single-issues drive the investment process of a sovereign wealth fund invested in hundreds of markets can create a host of problems. For example, the fund is under political pressure to divest from all coal assets, while the fund is still invested in oil & gas investments. At the end of 2014, Norway’s wealth fund owned 2.16% of BP PLC and 0.84% of Canadian energy giant Cenovus Energy Inc. In addition, the fund is being maneuvered to boost investments in renewable energy, a popular theme for many policymakers and a number of asset owners such as large private endowments, Swedish buffer funds and Dutch pensions. At the beginning of the year, the sovereign fund signaled a nearly US$ 3 billion allocation toward green technology listed equities. However, many top companies listed in the European Renewable Energy Index, have posted poor returns or even losses in 2014. At the end of 2014, the fund held US$ 4.5 billion in green technology companies.

Dyrdal writes about the importance of holistic thinking, what the fund’s creators used to combat short-term thinking and special interests.

Citing the fund’s impressive growth, Dyrdal understands that using the wealth fund for political expediency and altruistic projects has a nicer ring than maintaining its conservative mission to continue to making prudent investments for an indeterminate future. In Dyrdal’s words, “‘How can you not use this opportunity to make a difference’ has a stronger appeal than ‘saving for future generations.’”

Dyrdal writes about the importance of holistic thinking, what the fund’s creators used to combat short-term thinking and special interests. The largest singular sovereign wealth fund was able to grow fast because Norway’s government did not deviate from the core mission of the fund.

To date, Norway’s sovereign wealth fund has probably the most stringent guidelines on environment-social-governance (ESG) investing compared to its peer wealth funds. Dyrdal agrees that the purpose of the wealth fund and its formation was a political decision and sums up his article by encouraging future fund leaders and politicians to consider the original mission of the fund and not focus too heavily on single issues stating, “When that discussion is to take place, it is important to remember the historical legacy and future responsibility, to ensure a comprehensive perspective.”

Referenced Articles
Original article in Dagens Naeringsliv: Oljefondet som politisk aktivist

Translated article: The Oil Fund as a political activist

Anne Sheehan to Retire, CalSTRS 1st Corp Gov Director

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Anne Sheehan, the first Corporate Governance Director at California State Teachers’ Retirement System (CalSTRS) and the current one, plans to retire March 30, 2018. Sheehan’s team manages an activist portfolio worth around US$ 4.1 billion, seeking to influence and help turnaround its large portfolio holdings in select public companies. Sheehan was hired back in 2008.

Christopher J. Ailman, CalSTRS’ chief investment officer, said in a organization release, “Anne has been my most unconventional, best hire.”

A replacement search is underway.

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Temasek Rides with Google on Go-Jek

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Singapore’s Temasek Holdings has reportedly joined forces with Google LLC and Chinese on-demand service provider Meituan-Dianping as part of a US$ 1.2 billion fundraising effort for Indonesian ride-hailing startup Go-Jek that has put regional rivals like Uber and Singapore-based Grab on notice.

Screen Shot Go-Jek, January 19, 2018

Although exact figures for individual stakes have so far been kept secret, the new infusion of capital puts Go-Jek, incorporated as PT Aplikasi Karya Anak Bangsa, at a valuation of roughly US$ 4 billion. Samsung Venture Investment Corporation also participated in funding, as well as existing private equity investors KKR & Co. LP and Warburg Pincus LLC.

Google’s direct involvement in Go-Jek’s growth – rather than through its Google Ventures unit – highlights its faith in the latent potential of ride-sharing services – and the tech-enabled consumer services sector as a whole – in Southeast Asia. Home to more than 640 million potential customers, the region was identified as the fastest growing emerging market for e-commerce globally in an industry report published jointly by Google and Temasek last December. According to data compiled by the internet-giant and the Singaporean sovereign wealth fund, ride-sharing in Southeast Asia is expected to grow into a US$ 20.1 billion industry by 2025, compared to US$ 5.1 billion in 2017.

2011 Origin Story

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Temasek Leads Series B Round for Chinese Robo Startup Rokid

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Rokid Corporation Limited, a Chinese robotics startup that specializes in smart devices assisted by artificial intelligence (AI), announced the closing of a Series B extension round through its WeChat account on January 18, 2018. The capital-raising effort was led by Singapore’s Temasek Holdings, with additional contributions from Credit Suisse Group, China Development Bank’s overseas investment arm CDIB Capital International, and existing investor IDG Capital. Although Rokid did not disclose the size or terms of the deal in its announcement, the technology company reportedly secured US$ 100 million in funding.

Founded in 2014 by chief executive Mingming Zhu and chief financial officer Eric Wong, Rokid’s core products consist of its smart speakers, the Rokid Pebble and Alien, as well as the newly debuted Rokid Glass augmented reality spectacles. The company’s most exciting offering, however, is its Full Stack Open Platform, a collaborative effort made in partnership with Alibaba that gives third-party developers backdoor access Rokid’s software suite and hardware integration and will – it hopes – help give its offerings the accessibility and recognition they need to thrive outside its home market of China.

Rokid is particularly keen on bringing its products to the U.S., where it believes it can challenge Google and Amazon’s dominance in the smart home arena. Amazon makes the Amazon Echo, while Google has Google Home.

The Series B

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