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SOVEREIGN FUNDS: Everything You Need to Know About the Recent Davos of the Desert

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A number of important events regarding the world of sovereign wealth funds occurred at the Future Investment Initiative (FII) 2018 in Riyadh, which has been dubbed the Davos of the Desert. Keeping this briefing concise, Saudi Arabia’s Public Investment Fund (PIF) disclosed updates on its investments domestically and internationally. The massive event attracted thousands of businessmen and executives, including asset owners from various continents and some of the largest sovereign investors.

Despite the political clouds that surrounded the mega conference, approximately US$ 56 billion worth of deals were announced at the 3-day event. These deals were in excess of 25, and most of them were signed with U.S. companies. About US$ 34 billion of the deals involved oil giant Saudi Aramco. Saudi Aramco and French oil major Total SA signed a deal. Saudi Aramco also signed deals with Halliburton Co. and Hyundai Heavy Industries Co. Commodities trading house Trafigura Group revealed a joint venture with Riyadh-based Modern Industrial Investment Holding Group to develop a smelter and refining complex.

PIF Gets Bigger

PIF has made progress with its staff size approaching 500 people. PIF revealed it has almost 10% of its assets held abroad and has a target to raise that allocation by 50% internationally by the year 2030, according to the organization’s managing director. PIF doubled the value of its US$ 3.5 billion investment in Uber, as the taxi app company revealed a US$ 120 billion valuation for a planned offering in the future.

PIF recently supported domestic stocks through banks, fund managers, and other intermediaries due. More large institutional investors are investing in Saudi Arabia’s growing stock market. Norway Government Pension Fund Global (GPFG) has 6.9 billion SAR worth of assets in Saudi Arabia, which are divided in over 42 companies. In an October 26, 2018, Reuters interview, Norges Bank Investment Management CEO Yngve Slyngstad disclosed the wealth fund is expected to double its investment in the Saudi Arabian stock market as the country will be included in the fund’s reference index months from now. He told Reuters at the time, “We invest in companies, not countries. Our investments in companies based in Saudi Arabia will not be changed based on political developments.”

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Japan’s GPIF Awards Nissay Asset Management with ESG Disclosure Mandate

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Increasingly asset owners across the Asia-Pacific region are studying the impacts of environmental, social, and governance factors on listed companies. As more Japanese pensions augment asset allocation to listed equities, the importance of corporate non-financial disclosures and practices becomes clear. These disclosures can have a material impression on company stock prices. In addition, Japanʼs Stewardship Code and Corporate Governance Code in 2014 and 2015 were launched, respectively. These codes helped the (environmental, social, and governance) ESG concept gain momentum in Japan.

Japan’s Government Pension Investment Fund (GPIF), the largest public pension fund in the world, awarded a research mandate to Nissay Asset Management Corporation. The mandate entails studying ESG disclosures. The study will conduct a comparable analysis on ESG standards and practices, while taking into account input from both investors and companies. With around US$ 110.5 billion in assets under management, Nissay Asset Management is owned by Japanese life insurance giant Nippon Life Insurance Company.

As GPIF boosted its allocation to domestic equities, the asset owner took a deeper look into the impact of ESG on equity investing. GPIF is keen on improving efficiencies in Japan’s capital markets. GPIF is a universal owner of stocks, similar in some aspects to what Norway’s Government Pension Fund Global (GPFG) does.

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Norges Bank Real Estate Management Buys Central Paris Property

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Norges Bank Real Estate Management, the real estate unit of Norges Bank Investment Management (oversees Norway Global Pension Fund Global), has signed an agreement to acquire a 100 percent interest in an office property located on 54-56 rue la Boétie in central Paris.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Schlumberger Gets Closer to Eurasia Drilling Company

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Russia’s sovereign wealth fund, the Russian Direct Investment Fund, and American oilfield services giant Schlumberger (SLB) have planned a deal to invest in Russia’s Eurasia Drilling Company Limited. RDIF CEO Kirill Dmitriev made the announcement. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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