Sovereign Wealth Fund Weekly News Roundup: The Revolving Door

April 10, 2015 by Loch Adamson

SWF Weekly News Roundup: Staff Turnover Continues Apace
SWF Weekly News Roundup: Iraq's Kurdish Government to Establish New Fund
SWF Weekly News Roundup: Temasek and QIA Invest in India
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Susan Doyle, who has departed the board of guardians of Australia's Future Fund

This year has seen several major arrivals and departures at sovereign wealth fund managements — and the high staff turnover is continuing apace. John Mulcahy and Susan Doyle have departed from the board of guardians of Australia’s Future Fund. The guardians are appointed by the government to oversee the fund’s investments. It is unclear at this stage when the two departing members, who had come to the end of their respective terms, will be replaced.

Meanwhile, He Linbo, also known as Ludwig He, has reportedly stepped down as head of the private equity department at the China Investment Corp. (CIC). He has been replaced by Wang Ou, formerly an official with the China Securities Regulatory Commission, according to media reports. CIC has long struggled to retain staff — and the government’s reshuffle of CIC’s management over the past few months has further hampered its attempts to in-source its operations.

While other funds have seen departures, the Abu Dhabi Investment Authority has made a new hire: Sam O'Sullivan will join the fund as a manager in its investment services department. O'Sullivan arrives from Brisbane, Australia-based asset manager QIC (formerly the Queensland Investment Corp.), where he was head of investment performance and risk management. 

Also this week, the Kurdistan Regional Government (KRG), the governing authority of Iraq’s semi-autonomous Kurdish enclave, passed legislation to create a sovereign wealth fund. In designing the management structure for the new Oil and Gas Revenue Fund lawmakers may wish to take cues from the State Oil Fund of the Republic of Azerbaijan  — the Kurdish fund shares SOFAZ’s mandate to allocate oil revenue to domestic infrastructure projects and intergenerational savings, as well as the government’s annual budget.

Indian Investments

Sovereign wealth funds continue to be bullish on India, as they seek to profit from the rise of the country’s newly-affluent middle class.

Singaporean state investor Temasek Holdings is reportedly ready to invest alongside London-based private equity firm Advent International in Mumbai-based Crompton Greaves Consumer Products, which is being spun out from its parent, Indian conglomerate Avantha Group. Temasek is likely to be a minority investor in the business, which has been valued at between 25 and 27 billion rupees (around $400 million).  

The Qatar Investment Authority (QIA) is also looking to increase its exposure to the world’s second most populous country. According to reports in the local media, QIA will raise its investment in a special purpose vehicle controlled by Bangalore-based real estate investment manager RMZ Corp. QIA committed $300 million to the SPV, which invests in Indian commercial real estate, in July 2013; the fund is now apparently prepared to inject a further $160 million into the vehicle in a fresh financing round. RMZ will use the capital to expand into new markets in Mumbai and Chennai.

Performance Reports

Sovereign wealth funds have started to publish their financial results for 2014 — and the results are mixed.  

Mubadala Development Co. , the Abu Dhabi-based sovereign development fund, reported that its revenues totaled 32.7 billion dirhams ($8.9 billion) over the period, up from AED 30 billion in 2013, bringing its overall assets to AED 243.6 billion as of December 31, 2014. Profits were down, however — AED 1 billion, compared with AED 1.5 billion in 2013 — largely due to lower income from the fund's financial investments and its oil and gas businesses, which were hit by the drop in energy prices in the second half of the year.

In contrast, profits were up at Panama’s Fondo de Ahorro de Panamá (FAP), which grew 4.79 percent over the 12 months to December 31, 2014, bringing its assets under management to $1.4 billion. FAP's performance was significantly better than for 2013, when its investments returned -1 percent. The improvement is largely due to the fund's implementation of a more ambitious asset allocation strategy that adds stocks and corporate bonds to its portfolio, which had previously been dominated by low-risk government bonds.  


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