In the news this week: The Sovereign Wealth Center (SWC)
publishes an exclusive interview with PSP
Investments’ CIO Daniel Garant. South
Korea’s National Pension Service (NPS) makes new
allocations to hedge funds and real estate. Qatari Diar, a
subsidiary of the Qatar Investment Authority, partners with a
renowned New York developer to build a commercial landmark on
Long Island. And Russia liquidates more state-owned assets to
meet its budget deficit.
PSP Investments’ CIO Talks Risk and
Reconfiguration with SWC
SWC published an exclusive interview with Daniel Garant,
CIO of Canadian pension fund manager the Public Sector Pension
Investment Board (better known as PSP Investments), on
Thursday. Garant, who took the top job at PSP in June 2015, has
faced a difficult macroeconomic environment during his first
twelve months: Almost as soon as he started, bond yields
crashed through the floor and the global oil prices plunged.
But the Canadian energy-markets expert has met these challenges
head-on and launched a major reconfiguration of
PSP’s portfolio strategy.
In speaking to SWC, Garant outlined his plans to introduce a
total-portfolio approach to PSP’s asset-allocation
framework and risk analysis. This new approach involves
breaking down assets into their constituent risk factors (such
as sensitivity to inflation or fluctuations in interest rates),
and aggregating risks across the portfolio. He also detailed
PSP’s recent moves into specific market sectors,
including logistics and renewable-electricity generation.
Extending Its Reach: South Korea’s NPS
South Korea’s National Pension Service (NPS)
has appointed four external asset managers: two to manage its
inaugural hedge fund investments and two to deploy fresh
capital in the South Korean real estate market.
NPS chose BlackRock Financial Management, a unit of New
York-based investment giant BlackRock Inc., and Chicago-based
alternatives specialist Grosvenor Capital Management to take
charge of its inaugural fund of hedge fund investments. In a
move to diversify its portfolio, the fund plans to entrust the
two firms with up to $500 million each to execute its
first-ever allocations to hedge funds.
Later in the week, NPS announced the appointment of two
Seoul-based asset managers, IGIS Asset Management Co. and
Samsung SRA Asset Management Co. (an investment subsidiary of
life insurer Samsung Life Insurance), to run its new local real
estate investment fund. The two firms will have up to 500
billion won ($432.8 million) to invest over the next two years,
with instructions to focus on high-quality office property in
South Korea with stable tenants.
Qatar Firm Looks to Build on New York’s Long
Qatari Diar Real Estate Investment Co., a subsidiary of the
Qatar Investment Authority, is partnering with New York
City-based real estate developer Tishman Speyer to develop a
$700 million office-and-retail complex on New
York’s Long Island. The 1.1 million sq. ft.
project will contain two 27-story office towers joined by a
four-story retail and food court area.
The office towers have already attracted the attention of
two New York-based corporate tenants: upscale department
operator Bloomingdale’s and workspace provider
WeWork have reportedly signed leases for office space in the
QIA’s funding will come as a relief to Tishman
— the property developer has been searching for a
partner to finance the development for more than six months.
Also investing in the project is Little Rock, Arkansas-based
Bank of the Ozarks.
Russia’s RDIF Helps Government Turn Diamonds
into Hard Cash
When Russia’s state development fund, the
Russian Direct Investment Fund (RDIF), ditched its stake in
state-owned diamond-mining company Alrosa earlier this year, it
appeared diamonds weren’t forever after
But it didn’t take long for RDIF to reconsider.
The Russian government has been selling off state-owned assets
to plug a yawning budget deficit; this week, the government put 10.9 percent of Alrosa under the
gavel. The privatization fetched 52.2 billion roubles ($813
million) or 65 roubles per share. RDIF not only bought 10
percent of the shares on offer but also acted in the capacity
of an investment bank, underwriting the deal and reportedly
brokering introductions to other state-owned funds, including
the Abu Dhabi Investment Authority and the
emirate’s sovereign development fund Mubadala