For sovereign funds regarding the falling price of oil, it is worth recalling Friedrich Nietzsche’s aphorism: “That which does not kill us makes us stronger.” Sovereign funds in the Gulf have increased exercising discipline from the sizable allocations of 2009 and 2010. SWFI research staff have composed the top ten game-changers for sovereign wealth funds in 2015.
10.) Smart Beta Lives
Many active investment managers despise the term “smart beta.” According to Investopedia.com, smart beta was the most searched for term in its dictionary in 2015. Google searches for smart beta continue to grow. Wealth funds continue to tinker with smart beta strategies. Some sovereign funds and pensions even partner with providers to back new product launches. State Street Global Advisors (SSgA) was able to secure the Alaska Permanent Fund Corporation (APFC) as a cornerstone client for their three new smart beta exchange-traded funds (ETF).
9.) Sovereign Wealth Funds Venture in Familiar Territory
To the surprise of many private equity funds, sovereign funds have been expanding their toolkit to invest directly in companies and assets. Wealth funds have typically been the large limited partners in funds (they continue to do so,) but are migrating outward in doing direct transactions and co-investments. Conference platforms have sprung up to facilitate the trend. SWFI recently launched a new initiative to service corporations and asset owners to meet this demand called SWFI Co-Investor Roundtable Program. The program is aimed at providing high-level roundtables between corporations and asset owners.
8.) Outrunning the Bear: A Potential Long Haul in Energy Investments
According to the SWFI’s Sovereign Wealth Fund Transaction Database, as of January 3, 2016, in calendar year 2015, wealth funds invested directly US$ 14.8 billion in the energy sector. This is compared to US$ 6.27 billion the calendar year 2014. Energy private equity funds and wealth funds continue to see value in depressed energy companies and assets. With prolonged low oil prices, these investments have plummeted in value since the end of 2014.
7.) Burnt Fingers in Brazil
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RDIF Portfolio Company PhosAgro Raises Bond Issue
PhosAgro is a portfolio company of the Russian Direct Investment Fund (RDIF). The company price out a US$ 500 million 5.25-year Eurobond issue that has a coupon of 3.949%.
Alison Swonnell Named Global Head of Institutional Marketing at Fidelity International
Alison Swonnell was hired on as Global Head of Institutional Marketing at Fidelity International. She will be based in London and report to Chuch McKenzie, the firm’s global head of institutional clients. Before Fidelity, Swonnell was Director of Fund Operations for LCM Partners, an alternative investment management firm.
NY Governor Cuomo Seeks to Treat Carried Interest as Ordinary Income for State Taxes
On January 18, 2018, New York Governor Andrew Cuomo revealed he had submitted a bill to the New York State Legislature that seeks to treat carried interest as ordinary income rather than capital gains in regard to state taxes. Governor Cuomo in his press release said that the federal carried interest tax provision costs New York roughly US$ 100 million per year.
William Bain – Bain Founder Passes Away
Dated January 18, 2018, William Bain Jr. passed away at his home in Naples, Florida at the age of 80. Bain started at the Boston Consulting Group and left in 1973 to form Boston-based Bain & Co. By 1984, Bain formed Bain Capital alongside a number of colleagues including former 2012 Republican presidential nominee Mitt Romney. In a statement to the Boston Globe, Romney said, ” It’s hard for me to imagine my life and career without Bill Bain’s mentoring.”
Prostar Capital Gets Controlling Stake in Socar Aurora Fujairah Terminal
Prostar Capital now has a 90% control stake in Socar Aurora Fujairah Terminal FZC by purchasing 100% of the shares of Socar Aurora Terminals S.A. The Prostar Capital entities investing in the asset are Prostar Asia-Pacific Energy Infrastructure Fund and a co-investment fund managed by Prostar Capital for a large U.S. state pension plan. The storage terminals acquired in the Port of Fujairah in the United Arab Emirates.
Socar Aurora Fujairah Terminal FZC is a joint venture between State Oil Company of Azerbaijan Republic (SOCAR), Swiss-based commodity trader AURORA Progress, and the Government of Fujairah.
Prostar Capital started buying the terminal back in 2013 at 18.6%. The private equity firm eventually moved its ownership up to 40% on August 14, 2015.
The Ireland Strategic Investment Fund (ISIF) and Hamburg-based Capital Stage, a solar and wind park operator, are financially backing the development of 20 solar farms in Ireland which has an estimated cost at €140 million. ISIF is funding 25% of the costs, with Capital Stage providing 75% of the costs.
The generation capacity is estimated at 140 MW, with each farm ranging between 5 MW to 25 MW. The majority of the solar farms will be located along the east and south-west coasts of Ireland. Power Capital, a Dublin-based energy company formed by Peter Duff and Justin Brown in 2011, is overseeing the developments.
Malaysia-based Permodalan Nasional Bhd (PNB) inked plans to acquire a stake in the Battersea Power Station from Malaysian developers Sime Darby Property and SP Setia, which between them own 80 percent of the site located on the south bank of the Thames. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]
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