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REVEALED: Sovereign Wealth Funds and Pensions Boost Real Assets in February

cityviewIn recent times, sovereign wealth funds and public pensions have boosted exposure to real assets. According to research by the Sovereign Wealth Fund Institute, more large public investors will augment allocation to real assets while lowering allocations to domestic equity and fixed income. For example, near the end of 2013, Australia’s Future Fund has planned to expand real asset allocation from just over 10% to barely under 20%. Embracing infrastructure, the sovereign fund’s chief investment officer, David Neal, was involved on them acquiring a stake in Perth airport. In August 2013, Neal received flack from the local press about the idea of the Future Fund paying too much for the airport.

Common reasons on why institutional investors are betting on real assets include: anemic interest rates, the potential for long-term income streams, possibility of rising inflation and lackluster bond yields.

Sovereign Wealth Fund and Public Pension Real Asset Updates – February Trends

Colossal public investors like CalSTRS had its board increase authority for investment officers to dole out money directly to infrastructure investments – a clear sign on real asset allocation demand. Heading North, the CPPIB moved mounds of capital targeting Indian real estate in core markets by partnering with local companies. On February 26, 2014, LS Power Equity Advisors, LLC, a U.S. power and energy infrastructure manager raised $2.075 billion for LS Power Equity Partners III, L.P. The energy manager received capital commitments from Asian sovereign funds as well as Gulf-based funds. The Alaska Permanent Fund Corporation committed US$ 200 million to the new fund – its first investment with LS Power. LS Power Equity Advisors, LLC buys operating power generation assets.

Flying over to Malaysia, 1Malaysia Development Bhd. (1MDB) is seeking to construct the country’s largest solar power plant. In fact, 1 MDB is contending to develop the solar project that is being proposed by Malaysia’s Energy Commission and Sustainable Energy Development Authority. This project would enhance the country’s photovoltaic capacity by 56%.

Qatar Central Bank Deals with MSCI

MSCI, a stock index company whose benchmarks influence investor behavior, has tremendous indirect power impacting the stock markets of smaller economies. In 1988, MSCI released its emerging markets index, a now-widely-used benchmark for many institutional investors wanting access to growth markets. China and South Korea make up the majority of the benchmark, but smaller economies such as Poland, Chile and even Qatar make up other pieces of it.

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bcIMC Buys into Bottling Business with PAI in €1.623 Billion Takeover of Refresco

Dutch soft-drink bottler Refresco Group N.V. has agreed to a buyout offer for all 81.2 million of its shares from French private equity firm PAI Partners SAS (PAI) and Canadian pension manager British Columbia Investment Management Corporation (bcIMC) in exchange for €20 in cash per ordinary share for a total consideration of €1.623 billion. Refresco’s major shareholders, which includes 3i Group, and shareholding members of its boards, who represent 26.5% of outstanding shares, have said they stand behind the deal.

Refresco’s board rejected an initial offer from PAI in April 2017 of €1.4 billion, which they felt did not adequately capture the value added by their plans to bolster its presence in North America through the acquisition of Canadian bottler Cott TB, a deal that went through in July for US$ 1.25 billion.

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Digital Insurance Distributor BGL Opts for CPPIB Money Over IPO

Canada Pension Plan Investment Board (CPPIB) is investing £675 million (US$ 895.715 million) for a 30% stake in Peterborough-based BGL Group, a digital distributor of insurance and household financial services to 8.5 million customers. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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