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WILL TAKE TIME: Malaysia’s 1MDB Plans to Close After Debt Repayment

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1Malaysia Development Berhad (1MDB), Malaysia’s scandal-ridden strategic development company, will close its door once it has settled all outstanding obligations, according to company chairman Mohd Irwan Serigar Abdullah. Speaking to reporters on the night of February 27th, Irwan said he was confident that revenues generated from the Malaysian government’s flagship infrastructure projects – including the East Coast Rail Link, the Mass Rapid Transit initiative, and the nearly completed Tun Razak Exchange in Kuala Lumpur – will be sufficient to cover the government-owned entity, which has racked up some MYR 50 billion (US$ 12 billion) in debt as of January 2016.

It Will Take Time

Irwan cautioned against a speedy resolution; however, saying, “Through this, we will pay the debts… Rome wasn’t built in a day, we will not get the revenue immediately, instead it will take more than 10 years to generate income from the long-term development.” Irwan, whose primary role is as Secretary General of the Treasury at the Ministry of Finance, also serves on the board of directors of Khazanah Nasional Berhad.

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CPPIB and Ares-Owned Neiman Marcus Faces Lawsuit from Marble Ridge Capital

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The storied Neiman Marcus Group is a highly-leveraged luxury retailer as the result of two leveraged buyouts (LBO). After its second LBO, Neiman Marcus was stuck with US$ 4.91 billion in funded debt. Neiman Marcus’ profits are in sharp decline starting from 2015. Neiman Marcus is facing short term debt maturities.

Hedge fund Marble Ridge Capital LP, a New York-based firm, is suing Neiman Marcus Group, Inc., and the investors behind it in Dallas County, Texas. Marble Ridge Capital claims the parent company of Neiman Marcus defrauded creditors of Neiman Marcus by transferring assets worth approximately US$ 1 billion of value to the parent company for no consideration. Maple Ridge Capital claims the scheme was perpetrated for the benefit of the indirect beneficial owners of the company – Ares Management, L.P. and the Canada Pension Plan Investment Board (CPPIB), according to the lawsuit. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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SWFI First Read, December 10, 2018

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IMF Bentham Opens New London Office

IMF Bentham Limited opened a new London office called IMF Litigation Funding Services Limited. The division will provide litigation finance, investment capital and strategic services for disputes in the EMEA region, which includes the United Kingdom, Europe, Middle East, and Africa.

Falck Renewables Buys Portfolio of Windfarms in France

A subsidiary of Falck Renewables acquired a portfolio of five onshore windfarms in north-eastern and western France from a fund affiliated with Glennmont Partners for €37 million. The sale was due to the fund’s divestment plan. These windfarms are located in Bois Ballay, Les Coudrays, Mazeray, Eol Team, and Noyales.

Carlos Ghosn Charged by Japanese Prosecutors

Japan government prosecutors indicted Carlos Ghosn, the former chairman of Nissan Motor, and the auto company. The indictment accuses the parties of violating Japanese financial laws by underreporting his compensation. Nissan disclosed Ghosn’s misconduct which included underreporting his compensation and using corporate funds for personal expenses.

OIF Plans to Go Defensive on Public Equities

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First Inning on Augmented Reality a Strike for SWFs

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Augmented reality (AR), which is not the same as virtual reality, is an industry that sovereign wealth capital has slowly permeated. The impressive technology has not made inroads into mainstream U.S. culture – remember Google’s efforts with Google Glasses. However, these augmented reality glasses may have industrial purposes such as in car production or logistics.

Malaysia’s Khazanah Nasional Berhad backed London-based Blippar, an augmented reality studio company. Blippar appears to be on the brink of financial collapse, according to a number of media sources. There is a dispute between investors Khazanah and Nick Candy, in which the SWF had blocked emergency fundraising. This fundraising effort would have most likely lowered Khazanah’s equity stake. In June 2018, Blippar raised an extra £20 million from investors to keep things running. David Rubin & Partners LLP was hired by Blippar as insolvency practitioners.

Magic Leap

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