The Sovereign Wealth Fund Institute asked Mr. Pearce how his views on asset management have evolved during the 25 years the bcIMC has ballooned from a C$ 15.9 billion fund to just over C$ 102 billion.
Mr. Pearce responded first with a correction. “Actually, that 15.9 number we’ve been using for the press isn’t quite right,” he said. “The number was closer to C$ 9 billion.” He then continued by detailing the fund’s conservative roots. “When we started in ’88 we were invested in Canadian bonds and the Canadian money market exclusively. Starting quite early, we worked on getting legislation to start allocating to equities and real estate. That began in 1989, and we implemented it in 1990.”
Another major change, he noted, was transitioning out of purely Canadian investments and developing a more global portfolio. Whereas the fund started at 100% Canadian investments, it has moved to 60% Canadian and 40% ex-Canada with a 50/50 split on the horizon.
Mr. Pearce sees a challenging investment environment ahead, noting that the “tailwinds of declining interest rates since 1981” have helped bcIMC best its benchmark. He sees the low return environment compounded with an inevitable rise in interest rates as “great possible headwinds.”
Another challenge Mr. Pearce sees isn’t directly linked to investments, per se, but policy and the general public’s opinion. He clarified by saying, “The general public doesn’t really understand the value of long-term capital. They get caught up in quarterly returns when we really should be looking at 10, 15, 20 year investment horizons [for public investors].” A number of the largest sovereign wealth funds report only on a 5, 10, and 20-year basis publicly.
He also mentioned special interest groups leading cries against the cost of defined benefit plans. He laments that there isn’t enough community outreach to explain that the investments these funds make in Canadian businesses directly helps the people so opposed to their dealings. “Some of the businesses we support, like TimberWest [a privately managed forest landowner], pay wages and support communities; when the employees retire, they’ll also have a pension benefit waiting for them.”[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]
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.
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.
[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]
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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