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Sovereign Funds Went Big in the Final Quarter of 2016

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Despite a succession of political shockwaves, sovereign wealth funds went back to plowing money into direct investments in the fourth quarter of 2016, investing US$ 60.31 billion versus US$ 30.43 billion in 4Q 2015, according to data from the Sovereign Wealth Fund Institute (SWFI). The SWFI transaction database tracks direct transactions made by sovereign funds, pensions and other public funds. Sovereign investors rallied in listed equities in the final quarter of 2016, with the United States far ahead.

Direct Transactions by Sovereign Wealth Funds – Billions USD

Source: Sovereign Wealth Fund Transaction Database, Extracted April 17, 2017

Source: Sovereign Wealth Fund Transaction Database, Extracted April 17, 2017

Sovereign investors rallied in listed equities in the final quarter of 2016, with the United States far ahead.

Energy and Real Estate

The energy sector contributed a whopping US$ 12.3 billion in the fourth quarter of 2016 by wealth fund direct investments. Next, the real estate sector represented US$ 11.4 billion in direct investments by sovereign funds in the fourth quarter of 2016. Some major real estate deals boosted the total, such as the China Investment Corporation (CIC) acquiring Canada Pension Plan Investment Board’s (CPPIB) 45% ownership stake in 1221 Avenue of the Americas, a Manhattan office property. The sales price for the stake was US$ 1.03 billion, with net proceeds to CPPIB of approximately US$ 950 million before closing adjustments.

Betting on Banks

Arguably one of the central reasons why global institutional investors bet large on banks is the probable rise of U.S. interest rates, coupled with possible reforms on the U.S. Dodd–Frank Wall Street Reform and Consumer Protection Act. The financial sector was a significant contributor to the total amount of direct wealth fund transactions in the ending quarter. Direct investments in the financial sector by sovereign funds surged to US$ 6.56 billion in the fourth quarter of 2016 compared to US$ 3.49 billion in the third quarter of 2016. Some notable transactions include large purchases of positions of listed equities in Comerica and Aviva.

ADIA Seeks to Sell KIC Headquarters

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The Abu Dhabi Investment Authority (ADIA) is seeking to sell the building that houses the headquarters of the Korea Investment Corporation (KIC). [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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BMO and OTPP Test Blockchain Canadian Dollar Debt Deal

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The Bank of Montreal (BMO) and the Ontario Teachers’ Pension Plan (OTPP) participated in a landmark blockchain Canadian-dollar debt transaction. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Just Group Acquires Corinthian Pension Consulting

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Just Group plc acquired a 75% ownership stake in the holding company of Corinthian Pension Consulting Limited (Corinthian Pension Consulting). Operating in the institutional world for over 12 years, Corinthian Pension Consulting provides advisory services to defined-benefit pension scheme trustees and scheme sponsors undertaking bulk scheme exercises. The remaining 25% will be retained by current shareholders of Corinthian Pension Consulting. Robert MacGregor will continue to lead Corinthian Pension Consulting, as its Chief Executive Officer. Furthermore, Corinthian Benefits Consulting Limited and Corinthian Affinity Solutions Limited will continue to operate as before, becoming part of a newly formed holding company, Corinthian Group Holdings Limited.

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