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Sovereign Wealth Funds React Differently on EU’s Russian Sanctions

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Sovereign Wealth Funds and Russia

Sovereign wealth funds in recent years have made significant investment strides into Russia – betting on Russian real estate, bonds and equities. Russia is one of the BRICS. Norges Bank Investment Management (NBIM), the body that manages Norway’s sovereign wealth, has invested in Russian share sales and other companies within Russia. VTB, one of Russia’s state-owned banks, had participation from three major sovereign wealth funds as cornerstone investors in its US$ 3.3 billion share offering in 2013. The China Investment Corporation (CIC) has committed capital to a myriad of Russian partnerships, funds and companies. For example, the CIC took stakes in Polyus, a gold miner and Uralkali, a Russian potash fertilizer business. Furthermore, the Russian Direct Investment Fund (RDIF) which is tasked to co-invest in opportunities with institutional investors into Russia, has helped bring more sovereign wealth investment into the country.

The Russian Government has spent considerable efforts building economic relations with the Middle East, East Asia and Central Asia.

EU and US Sanctions

VTB Group’s US$ 1.5 billion loan deal will probably be canceled. European banks are fearful to entangle themselves in risky deals. The United States received US$ 8.97 billion by imposing a fine on BNP Paribas SA. BNP Paribas engaged in deals that violated sanctions against Sudan, Iran and Cuba. It was the biggest fine ever paid by a bank in a sanctions case.

On July 29, 2014, European Union members enacted a series of targeted sanctions against Russia. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Altitude Infrastructure Gets Financing on Haute-Garonne Network Project

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Altitude Infrastructure SAS inked a 25-year concession agreement and closed a debt financing package for the deployment and maintenance of an ultra-high-speed broadband network in Haute-Garonne. Haute-Garonne is a department in the south of France.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Guggenheim Partners Agrees to Acquire Millstein & Co.

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On July 11, 2018, Guggenheim Partners inked a deal to acquire New York-based Millstein & Co., L.P., an advisory firm formed by Jim Millstein. Millstein will become co-Chairman of Guggenheim’s securities business. Millstein & Co. will become part of Guggenheim Securities, the investment banking division of the company. Ronen Bojmel will lead the combined Guggenheim restructuring team.

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GIC Holds Steady, Maintains Cautious Investment Stance

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Singapore’s GIC Private Limited returned a 5-year return of 6.6% ended March 31, 2018. At March 2018, GIC had increased cash and nominal bonds up 2% to 37% of the total portfolio, while lowering exposure to developed market equities from 27% to 23%.

GIC CEO Lim Chow Kiat commented in his annual letter in the FY 2017-2018 report that, “In view of the high asset valuations, the increased risk of monetary policy tightening across different jurisdictions and the elevated uncertainty, we maintain a cautious investment stance. Nevertheless, we remain ready to take advantage of potential dislocations. The jump in market volatility experienced in early 2018 offered an indication of potentially bigger market turbulence and opportunities in the future.”

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