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SWFI First Read, June 14, 2018

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ECB Draghi Telegraphs Dovish End to ECB QE Bond Purchases

The European Central Bank (ECB) revealed its departure from quantitative easing (QE). The ECB accelerated the move after data showed U.S. retail sales surging in May 2018. The ECB signaled that from September 2018, the pace of bond buying will drop from 30 billion EUR to 15 billion EUR and then drop to zero in December 2018. The central bank president also addressed media that the bank denied plotting against the new Italian government by ceasing to buy its bonds in May. Mario Draghi insistedto reporters there is no conspiracy.

The ECB said in a statement that the central bank would have rates depressed as long that it is needed to make sure the euro zone inflation remains on trajectory to hit the central bank’s target of just below 2%.

Mega Media Merger of AT&T and Time Warner Would Create Large Pool of Retirement Assets

The massive merger between AT&T Inc. and Time Warner Inc. got the go ahead after the U.S. Department of Justice tried to block the deal over anti-trust concerns. The merger, which is expected to close by June 20, 2018, could create a massive pool of retirement plan assets worth US$ 94 billion. The record keeper for the AT&T and Time Warner defined contributions plans is Fidelity Investments.

Ireland Strategic Investment Fund Supports Domestic Whiskey

The Ireland Strategic Investment Fund (ISIF) financially supported the €10m launch of Ilen River Partners’ Irish Whiskey Growth Fund earlier in June. According to a June 6th statement, “The Fund will provide stock-financing loans secured on borrowers’ existing whiskey stock, and tailored to the specific needs of participating businesses.”

Bill Gates Money Flows Into Evolve Biosystems

The Bill & Melinda Gates Foundation led a Series C round in Davis, California-based Evolve Biosystems, a life sciences company. Horizon Ventures also invested in the Series C round.

Abraaj Holdings Files for Liquidation

Troubled private equity firm Abraaj Holdings has filed for liquidation in the Cayman Islands. The filing seeks to appoint PricewaterhouseCoopers (PwC) as the provisional liquidator. In a statement by the firm’s founder, Arif Naqvi, he stated, “The process of court supervised restructuring will take a few months. I will continue to support this orderly process and help ensure the best possible outcomes for all the stakeholders.”

Abraaj Group had also sold off its entire 5.4% stake in Egypt-based Orascom Construction at US$ 8.30 per share – a total value of US$ 52 million.

Thompson, Siegel & Walmsley Goes Internal for Next CEO

Frank Reichel was named CEO of money manager Thompson, Siegel & Walmsley, effective September 30, 2018. He is replacing Horace Whitworth who will remain as the company’s chief financial officer until there is a replacement. Whitworth will also serve in an advisory capacity until he retires in a number of years. Reichel is currently the company’s president and his current position will be filled by firm managing director John Reifsnider.

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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President Trump Asks SEC to Review Semi-Annual Corporate Reporting

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U.S. President Donald Trump is giving a possible gift to long-term institutional pension funds and sovereign funds that clamor for “long-termism” when it comes to publicly-traded companies. Many large Canadian pension funds, like CPPIB, have decried that listed companies operate in short-termism earnings philosophy, trying to focus on a quarter by quarter basis. BlackRock’s CEO Larry Fink has publicly heavily opined on short-term corporate think on quarterly earnings. Listed company CEOs are heavily incentivized to produce strong quarterly earnings, which is often linked to corporate compensation.

President Trump requested the U.S. Securities and Exchange Commission (SEC) to study the impact of allowing companies to file reports in a six month time framer versus the traditional quarterly time frame.

On Twitter, President Trump tweeted, “In speaking with some of the world’s top business leaders I asked what it is that would make business (jobs) even better in the U.S. ‘Stop quarterly reporting & go to a six month system,’ said one. That would allow greater flexibility & save money. I have asked the SEC to study!”

Listed companies in the U.S. are required to file earnings reports every quarter. This move could reduce filings to two times per year. The investor community is divided as long-term institutional investors typically want companies to report less, while other investors favor more disclosure – keeping corporate executives accountable to generating returns for shareholders.

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