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Top 10 Sovereign Wealth Fund Game-Changers of 2012

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SWFI_logo_122012 proved to be a dynamic year for sovereign wealth funds in terms of policy decisions and investment strategies. Notably, a number of sovereign funds were created, especially in resource rich nations like Angola. Our staff has compiled a list of the top ten game-changers that will set the tone for sovereign wealth funds in 2013.

10.) Sovereign Wealth Bankers

As Western banks are smacked with a surplus of regulations, banks are not lending as much, especially to projects and certain lines of business. Financial institutions are concerned about illiquid investments; Basel III makes it more challenging. Banks are cautious about adding illiquid liabilities on their balance sheets. Sovereign wealth funds have the chance of becoming the new bankers for the next decade. Many are creating offshore entities to begin lending operations.

Sovereign wealth funds are involved in the real estate lending business. For example, Singapore’s GIC was a lender for the resorts that Paulson and other investors owned. When Paulson & Co lost the resorts, Singapore’s GIC purchased them in bankruptcy.

9.) Capital Competition, Spreads Across Continents

The world is competing for capital, more so than ever before. Russia has constructed state investment vehicles like the Russia-Direct Investment Fund (RDIF) to boost their economy and give foreign investors access to opportunities in Russia untouchable in years past. A number of nations in the Middle East are developing policies to attract long-term investments, such as co-investing in government energy infrastructure.

Capital-starved Europe continues to sell off public assets to amass capital to pay down unsustainable deficits. Even, China has removed the QFII barrier for sovereign wealth fund investors to provide long-term capital in their domestic security markets.

8.) Fertilizer, Food and Milk

The world now has around 7 billion people. Population growth, modifications in tastes and preferences, limited resources, and environmental issues are factors pushing up the price of food. Mega institutional investors want access to agriculture and land as an asset class.

Fertilizer is in demand, as farmlands need to increase productivity. The China Investment Corporation invested Uralkali OAO, a global potash producer that possesses five mines and seven ore-treatment mills located in Perm Territory in Russia. There has been sovereign wealth interest in dairy farms in New Zealand. Middle Eastern SWFs and other public pension funds have been purchasing agricultural land and food companies in Latin America.

7.) Investing in Financials in Developing Middle-Class Economies

Singapore’s Temasek Holdings purchased a stake in a November secondary public offering in Turkiye Halk Bankasi AS, a government-owned bank in Turkey. It is Turkey’s second largest state-owned bank by assets. In September 2012, the Government of Singapore Investment Corporation Private Limited was subscribing to a Hong Kong H-share private placement by China Pacific Insurance (Group) Co Ltd (CPIC).

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SWFI First Read, September 21, 2018

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U.S. Public Becomes More Aware that Gmail Scans Emails

Alphabet is a major stock holding for sovereign wealth funds and large pensions. Search giant Google is under fire for allowing third-party partners and companies, like Return Path Inc and other advertisers, to share data from Gmail accounts. Many experts and tech observers already knew this, but more people in the public are becoming aware of Google’s practices when it comes to privacy. Google disclosed in a letter to U.S. lawmakers this finding. The Wall Street Journal reported that in some instances, app companies were able to read people’s emails in order to improve their algorithms. In 2017, Google said they would stop scanning all of one’s Gmail messages for the goal of personalized ads.

GPIF Infrastructure Exposure Almost Reached 200 Billion Yen in March 2018

Japan Government Pension Investment Fund’s (GPIF) exposure to infrastructure real estate was 196.8 billion JPY at the end of March 2018. At that period, 57% of the exposure was to the UK, 15% was to Australia, 15% to Sweden, 10% to Spain and 3% to Finland. 21% of GPIF’s infrastructure portfolio was linked to airports versus 27% to ports.

AIMCo-backed sPower Closes $498.7 Million Bond Deal

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Iceland Contemplates a Sovereign Wealth Fund

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The Government of Iceland is looking to possibly form a sovereign wealth fund to stabilize the country from unforeseen shocks to the national economy. The Iceland government released a statement saying, “The state’s contributions to the Fund will be equivalent to new revenues from publicly owned power production companies which are expected to accrue in the coming years.”

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CBRE Global Wins First GPIF Global Real Estate Mandate

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Japan Government Pension Investment Fund (GPIF) awarded its first global real estate mandate by hiring CBRE Global Investment Partners Limited. This is a global core real estate fund-of-funds separate account. Overseeing this mandate as a gatekeeper is Asset Management One Co., Ltd., which is a unit of Mizuho Financial Group. This RFP was launched in April 2017.

CBRE Global Investment Partners is the multi-manager arm of CBRE Global Investors.

In addition, on August 8, 2018, GPIF hired two custodians for short-term investments. These custodians are Trust & Custody Services Bank, Ltd and The Master Trust Bank of Japan, Ltd.

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