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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.

SWFI First Read, January 16, 2018

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BP Plans to Take $1.7 Billion Charge to End Legal Claims on Deepwater Horizon

BP Plc is planning to take a US$ 1.7 billion charge to end legal claims regarding the disastrous 2010 Deepwater Horizon spill in the Gulf of Mexico.

Ethereum Co-Founder Leaves Fenbushi Capital

Vitalik Buterin, a co-founder of Ethereum, which is a cryptocurrency, exited China-based Fenbushi Capital. Fenbushi Capital was formed in 2015. Buterin is retaining his role as an advisor of Fenbushi Capital. Buterin dropped out of the University of Waterloo in 2014 when he got a Thiel Fellowship. This permitted him to work on Ethereum full time.

Kingdom Holding Sells Four Seasons Beirut Hotel Stake

Saudi Arabia’s Kingdom Holding sold its position in the Four Seasons Hotel in Beirut for roughly US$ 100 million. Blominvest, a unit of Blom Bank, advised on the transaction. The Four Seasons will continue to manage the property.

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Deutsche Bundesbank to Slowly Add Renminbi into Foreign Reserve Mix

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Deutsche Bundesbank’s executive board made a decision to invest in Chinese renminbi in the summer of 2017 as part of its foreign currency reserves. The German central bank on January 15, 2018, confirmed it will start investing in Chinese renminbi and also consider investing in additional foreign currencies. The move mimics the European Central Bank (ECB), which already considers the Chinese renminbi as a reserve currency. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Bpifrance, CDB and Cathay Capital Launch Third Cross Border Fund

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Bpifrance, China Development Bank Capital Co., Ltd. (CDB Capital) and Cathay Capital agreed to launch Sino French Midcap Fund II. This is the second fund the group is launching after the €500 million Sino French Midcap Fund I from June 27, 2014. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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