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Saudi FinMin Says No Need for Sovereign Wealth Fund

Saudi Arabia’s Finance Minister Ibrahim Abdulaziz Al-Assaf said there was no need for the country to create an official sovereign wealth fund to manage its oil reserves. The vast pool of petrodollars are managed by the Saudi Arabian Monetary Agency (SAMA), the Kingdom’s central bank. The majority of those assets are in liquid securities. The Shura Council, Saudi Arabia’s advisory body, had discussions of creating an official sovereign wealth fund to manage oil reserves, but made no concrete decisions.

Ibrahim Abdulaziz Al-Assaf served as vice governor of SAMA and has been a board member of Saudi Aramco since 1996.

View the Profile of SAMA Foreign Assets

The Saudi Finance Minister spoke on Saudi television on Christmas, saying the reserves are professionally managed by Saudis as well as external fund managers. He also said the investment returns were similar, or at some years higher, compared to Norway’s sovereign wealth fund. Saudi Arabia also has the Public Investment Fund (PIF), which focuses more on domestic investments. The Cabinet of Saudi Arabia on December 25, validated a 2015 fiscal budget, showing a US$ 39 billion deficit.

SWFI First Read, December 15, 2017

Gaw Capital Sells Cross Tower Shanghai Building

Hong Kong-based Gaw Capital Partners has agreed to sell the Cross Tower, a 24-storey commercial building in Shanghai, to World Union Investment Management, for 2.66 billion RMB (US$ 402 million). The tower is located in the Huangpu district.

RDIF Portfolio Company Geopharm Plans to Increase Insulin Production

Russia-based Geopharm is a portfolio company of the Russian Direct Investment Fund (RDIF). Geopharm signed a special investment agreement with the City of St. Petersburg, Russia. Geopharm plans to invest more than 3.3 billion rubles in building a complex to meet insulin production demands.

Norway’s KLP to Exclude Companies with Oil Sands Extraction via Revenue Threshold

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NZ Super Resumes Government Contributions

The New Zealand Superannuation Fund (NZ Super) has resumed receiving contributions from the New Zealand government in the face of rising obligations as an increasing proportion of the country’s population approaches retirement. According to a statement released by the fund’s managing Board of Guardians, the government plans on investing US$ 5.3 billion into NZ Super between now and June of 2022, with the first payment scheduled for December 15, 2017.

Policymakers believe the resumption of government contributions, which were halted in July of 2009, is expected to ease the burden on the country’s current taxpayers and future generations. Withdrawals from NZ Super are expected to peak in 2078, at which point the fund will be covering 12.8% of New Zealand’s pension obligations. The new wave of contributions will initially be invested in passive, low cost equity and bond investments, according to Catherine Savage, Chair of the Guardians.

Recent Performance & Leadership Change

NZ Super has enjoyed one of its best annual performances since its founding in 2001, with a reported return of 20.7% before tax for a 12-month trailing period ended June 30, 2017, up 5 billion NZD (US$ 3.6 billion) compared to 2016. NZ Super generated 21.85% annual return in its global equities, developed market portfolio, according to its 2017 annual report.

NZ Super faces a changing of leadership in the coming year with the exit of chief executive Adrian Orr, who will leave the Fund officially in March of 2018 to serve a five-year term as Governor of the Reserve Bank of New Zealand. Mr. Orr has earned a spot numerous times in the Sovereign Wealth Fund Institute’s Public Investor 100 annual ranking over the years, most recently in 2017 at #3.

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iZettle Raises US$ 47 Million in Series E, Prepares for 2018 Listing

Card transaction platform iZettle AB has raised another US$ 47 million in Series E funding, this time with new backing from Sweden’s AP4 and early-stage venture capital firm Dawn Capital. Previous investors in the Stockholm-based payments business include American Express, MasterCard, Intel, and Spain’s Santander Group. With US$ 235 million in equity to date, iZettle is quickly approaching an estimated valuation of US$ 1 billion.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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