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Top 10 Sovereign Wealth Fund Game-Changers of 2014

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top 10 gamechangers

Smart beta, healthcare investing, private equity, institutional real estate and multi-asset strategies were some popular themes for institutional investors in 2014. Highlighting the importance of sovereign investors, sovereign wealth funds surpassed US$ 7 trillion in assets, being a bigger investor market, in terms of asset under management, compared to U.S. defined-benefit plans. Year over year, more sovereign wealth funds are engaging in direct transactions and participating in co-investments with private equity funds, pensions and specialist investors. According to SWFI’s proprietary Sovereign Wealth Fund Transaction Database, funds like Singapore’s GIC Private Limited and Qatar Investment Authority (QIA) have contributed to boosting direct deals in the world of SWFs. Our staff has formed a list of the top ten game-changers that will set the pace for sovereign wealth funds in 2015.

10.) Real Estate Investment in Asian Emerging Markets
With greater frequency, sovereign wealth funds have been allocating toward real estate in emerging markets in Asian countries such as India, Indonesia and Malaysia. Even massive Canadian pension giants like CPPIB have been investing in Indian real estate. In February, CPPIB Credit Investments Inc., a subsidiary of CPPIB, and Piramal Enterprises Limited agreed to a deal for providing rupee debt financing to residential developments across India’s urban corridors. In November, GIC Private Limited entered into a deal with Rajawli Group, an Indonesian developer, to jointly invest up to US$ 500 million in equity toward Indonesian property projects.

9.) More Sovereign Wealth Funds Embracing Smart Beta
A number of sophisticated institutional investors like Norway’s sovereign wealth fund are alienating traditional fund managers for specialist funds and strategies. Globally, more sovereign wealth funds are taking a greater look at smart beta or factor-based strategies. In September, New Mexico State Investment Council (NMSIC) embarked on a search for one or more smart beta managers to manage US$ 1 billion. Learn more about our smart beta study: here

8.) Ground Game in America
A number of sovereign funds dialed back investments in emerging markets such as Mubadala Development Co. Deal data from SWFI’s Sovereign Wealth Fund Transaction Database astutely pointed out that America was in vogue financially speaking in 2014. With more investment activity in the U.S., sovereign wealth funds have begun augmenting staff, forging alliances and hiring advisors. In June, Temasek Holdings opened a New York office to complement offices in Mexico City and São Paulo. Norway’s sovereign wealth fund hired more people in New York, adding to its real estate capabilities.

7.) Sovereign Wealth Centers on Successful Startups
Sovereign wealth funds are investing in some of the most popular late-stage startups covered by trend technology blogs such as TechCrunch, PandoDaily and Re/code. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

SWFI First Read, May 25, 2018

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MedInvestGroup Pushes Investment into Russian High-Tech Oncology Centers

The Russian Direct Investment Fund (RDIF) and Mubadala Investment Company have attracted MedInvestGroup, which manages a network of the PET Technology regional oncology and radiological centers, as a strategic investor in the joint management and development of a network of cancer diagnosis and treatment centers. The deal aims to significantly improve the efficiency of the already functional centers in Podolsk and Balashikha. The corresponding agreement was announced today at the St. Petersburg International Economic Forum.

Southern Satellite City and RDIF Reach a Financing Agreement

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French Industrial Giants Find Opportunity with RDIF

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A number of French industrial companies continue to invest within Russia, finding opportunities within the mega country. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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CPPIB Targets 33% in Emerging Markets by 2025

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The Canada Pension Plan Investment Board (CPPIB) generated a net return after expenses and pension contributions of 11.6% for the fiscal year ended March 31, 2018, versus its reference portfolio of 9.8%. For the reported fiscal year, CPPIB grew its net assets to a new high of C$ 356.1 billion (US$ 277.2 billion), compared to C$ 316.7 from the year previous.

Mark Machin, President and Chief Executive Officer at CPPIB, attributed the performance to the rising tide in public equity markets across most geographies, whose volatility in recent months was buoyed by significant fourth quarter earnings in the fund’s private holdings. Public and private equities, CPPIB’s first and third largest asset classes by exposure at 38.8% and 20.3%, saw estimated returns of 11.4% and 16.1%, respectively. Machin joined CPPIB in 2012 and was moved to the top in June 2016, following the departure of Mark Wiseman. Machin has a knack for the Asian region, being CPPIB’s first president for Asia and also spent nearly 20 years in Asia, working at Goldman Sachs. CPPIB plans to continue heavily investing in the APAC region, along with India.

Emerging Markets

“By 2025, we will invest up to a third of the Fund in emerging markets, which by that time are anticipated to account for 47% of global GDP,” said Machin in his section of the annual report outlining the pension’s updated strategic plan. CPPIB currently has C$ 56.1 billion invested in emerging markets, C$ 22.4 billion of which is wrapped up in China.

Foreign and emerging markets continued to dominate in CPPIB’s private equity investments with returns of 16.0% and 19.5%, compared to 1.8% for their Canadian counterparts. Asia was a standout market for the pensioner, which raised its exposure to private equity deals in the region by nearly 28% from C$ 13.4 billion to 17.1 billion, closed six direct investments worth C$ 1.6 billion, committed C$ 1.7 billion towards eight funds, and completed three secondary transactions for C$ 400 million.

With 275 global transactions completed over the fiscal year, CPPIB’s geographic exposure places 15.1% of its assets at home in Canada, 37.9% in the neighboring United States, 13.2% in continental Europe, 5.6% in the United Kingdom, 3.1% in Australia, and a whopping 20.4% in Asia.

Public Equities

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