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Will Sovereign Funds Capture Opportunity in Trump’s Space Force?

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U.S. President Donald Trump is keen on making a mark in the defense industry by launching a Space Force (joining – Army, Navy, Air Force, Marines, Coast Guard) – attempting to ensure American dominance in space. Morgan Stanley eyes a potential windfall, seeing a US$ 1 trillion economy brewing. Morgan Stanley released a note to clients commenting that a Space Force, “could address critical vulnerabilities in national security, raising investor awareness in the formation of what we see as the next trillion-dollar economy.”

Sovereign wealth funds and other asset owners are major financial backers of semiconductors, defense, and companies focused on satellites and rockets. According to SWFI data, since 2014, there has been an increase in direct sovereign wealth fund investment in the aerospace and defense industry. In 2017, sovereign funds directly invested US$ 4.76 billion in aerospace and defense.

On June 18th, President Trump said, “Very importantly, I’m here by directing the Department of Defense and Pentagon to immediately begin the process necessary to establish a space force as the sixth branch of the armed forces. That’s a big statement.”

Sovereign Wealth Investment

From a sovereign wealth fund perspective, many wealth funds are active in investing strategically in the aerospace and defense arena. Mubadala Investment Company has been active in aerospace investments such as Piaggio Aerospace SpA, while SoftBank Group has tremendous exposure to artificial intelligence companies and semiconductors. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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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