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Will FX Management Be Even More Important for Asset Owners Post-Brexit?

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Across the globe, mega asset owners, such as USS Investment Management and California State Teachers’ Retirement System (CalSTRS), are closely monitoring the events after the Brexit vote. While some sovereign wealth funds reiterated their belief in investing in the United Kingdom, such as the Kuwait Investment Office and Norges Bank Investment Management (NBIM), other wealth funds are reassessing potential deals and future transactions due to the perceived volatility of the British Pound. Both of these sovereign investors, who have European outposts in London, have skin in the game. Norway’s wealth funds, as of the end of March 2016, had 83.56 billion NOK allocated to UK government debt and 155.929 billion in German sovereign debt. 5.2% of the wealth fund’s fixed income portfolio had exposure to the British Pound and 25.8% to the Euro as of March 31, 2016.

Asset managers are prepping their clients on the impact of currency swings when it comes to returns. “Brexit is the most recent catalyst for foreign currency market volatility. Even though the derivatives market was implying a volatile and binary session over the vote, heightened implied and realized volatility will persist in all markets and asset classes as the ripple effect continues for the foreseeable future. Foreign exchange funds were at the epicenter for the discussion of returns following the vote given the focus on both the volatility and out-right level of the British Pound. Managing underlying FX exposures, particularly the Pound and Euro, in a global mandate of asset classes and investing in primary FX markets will become an increasingly large component of sovereign and pension investing. It is very possible that diverging monetary policy moves and global political risks could lead to a continued move higher in the US Dollar.” Matthew Feldmann, former partner and portfolio manager of Brevan Howard in Geneva, Switzerland, who is working with Scepter Partners to launch their alternative investment fund.

Years of accommodative monetary policy set by Occidental central banking institutions have suppressed volatility across asset classes and markets. However, political events, ongoing turmoil in the Middle East and disease outbreaks have the potential to break the buttons off central bank’s hold on volatility.

Senior Personnel Shuffle at Khazanah Nasional

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Malaysia’s Khazanah Nasional Berhad has elevated a number of investment officers in its Senior Leadership Team as part of its regular renewal of its upper management. The changes – which went into effect on April 1, 2018 – are in line with its ongoing leadership succession initiative, and supplement Khazanah’s ongoing institutionalization efforts, according to a press release.

Amran Hafiz Affifudin, who has served as the sovereign wealth fund’s Director of Investments since 2013, has been promoted to Executive Director of Investments. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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BC Partners and OTPP Agree to Recap GFL Environmental

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Private equity firm BC Partners and the Ontario Teachers’ Pension Plan (OTPP) are leading an investor group to recapitalize Toronto-based GFL Environmental Inc. The transaction implies a total GFL enterprise value of approximately US$ 5.125 billion. GFL operates in the world of North American waste – or perhaps known as environmental solutions. GFL runs a network of more than 140 facilities across Canada and in Michigan. GFL was contemplating an initial public offering early in January, having hoped to raise US$ 800 million.

The deal is expected to close by June 30, 2018.

[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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FSDEA Attempts to Get Control of Mauritius Frozen Assets

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With new leadership at the helm of the Fundo Soberano de Angola (FSDEA), new plans are being discussed on asset allocation. Mauritius government officials had froze assets of FSDEA’s main manager Quantum Global Group. A unit of Quantum Global Group managed seven investments funds on behalf of FSDEA.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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