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. ]
New York-based Infor is an enterprise cloud software company. Infor raised US$ 1.5 billion from existing shareholders, Golden Gate Capital and Koch Equity Development LLC. Koch Equity Development is the investment and acquisition subsidiary of Koch Industries, Inc. Infor has 17,300 employees. At fiscal year 2018, Infor claims it generated over US$ 3 billion in revenue. Infor states that over 72% of all hospitals in the United States run Infor applications. Infor could be heading toward an initial public offering (IPO) or possibly be acquired by a company like Oracle Corporation or Salesforce. Charles E. Phillips is the CEO of Infor and before heading it was Co-President of Oracle from 2003 to 2010.
On February 21, 2017, Koch Equity Development invested US$ 2 billion into Infor. Koch Industries was a customer of Infor before it became an investor in the company. Golden Gate Capital made its first investment in Infor in 2002.
Matt Flamini is the President of Koch Equity Development. Jim Hannan is Koch Executive Vice President and CEO of Enterprises for Koch Industries, Inc.
Australia’s Scott Morrison government may soon allow the country’s Future Fund to offer low-fee superannuation accounts. Aware of the proposal, Prime Minister Morrison stressed that offering Australia a low-fee, government-managed superannuation fund as a default option is not government policy.
However, many proponents of this model believe it would create competition in the country’s US$ 2.7 trillion dollar retirement system. The Future Fund Chairman, Peter Costello, and economist Nicholas Gruen, CEO of Lateral Economics, put forth the idea, and it is quickly gaining support. This comes in the wake of Australians learning that they were losing US$ 3.8 billion annually in high-fee, underperforming accounts, and many were mistakenly being charged fees with no accompanying service provided. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]
In a boost for Gulf-based debt, JPMorgan is adding their debt compositions to two influential emerging market bond indexes. These emerging market indexes are the most widely tracked among asset managers in the industry. Saudi Arabia, the United Arab Emirates, Bahrain, Kuwait, and Qatar are being added to the J.P. Morgan EMBI Global Diversified Index and the EMBI Global, starting January 31, 2019. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]
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