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Sovereign Wealth Fund Takes Legal Action Against Banco de Portugal Over Costly Debt Transfer

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Adrian Orr, CEO of the New Zealand Superannuation Fund

Adrian Orr, CEO of the New Zealand Superannuation Fund

On July 3, 2014, New Zealand Superannuation Fund (NZSF) invested US$ 150 million in notes issued by Oak Finance Luxembourg SA. The vehicle Oak Finance was arranged by Goldman Sachs as an independent entity to assist in the financing of trade transactions being made by Lisbon-based Banco Espírito Santo. For example, one trade deal was Banco Espírito Santo’s backing of a financing agreement between Venezuela’s state-owned oil firm Petróleos de Venezuela SA and China-based Wison Engineering Services Co. Banco Espírito Santo provided letters of credit to Petróleos de Venezuela SA with regard to an oil refinery project in Puerto la Cruz.

Oak Finance lent US$ 784.6 million to Banco Espírito Santo in the form of senior debt. Bad news in the press trickled out regarding allegations of fraud, money-laundering and document falsification at Banco Espírito Santo. On August 3, 2014, Banco Espírito Santo failed and the Oak Finance loans, along with other senior loans, were moved to a successor bank Novo Banco. Here is where it gets interesting.

Losing Out

On December 22, 2014, Banco de Portugal, Portugal’s central bank, moved the loan back to Banco Espírito Santo – essentially an entity where the sovereign wealth fund has virtually no shot of being repaid. A law brought on August 1, 2014, made it so any shareholder that owns more than 2% of the insolvent bank would be prohibited from transferring liabilities to the new bank. Banco de Portugal moved the loans back because it saw Oak Finance as a vehicle for Goldman Sachs, the loan arranger. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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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