Welcome to the Sovereign Wealth Fund Institute
Current News
7/2/2008
Latham & Watkins advises the Qatar Investment Authority in strategic alliance between The State of Qatar and NYSE Euronext
NYSE Euronext will purchase a 25% stake in the DSM for $250m in cash which represents the largest investment ever made by NYSE Euronext in a foreign exchange. The State of Qatar will retain ownership of the remaining 75% of the DSM through the Qatar Investment Authority. The closing of the transaction is expected to take place early during the fourth quarter of 2008. Latham & Watkins LLP represents the Qatar Investment Authority in this transaction.
read more: AME Info
6/30/2008
Mongolia contemplating SWF
Mongolia, a country rich in minerals, is contemplating creating a sovereign wealth fund. According to the IHT, "The Mongolian People's Revolutionary Party has promised to give each citizen a cash dividend of 1.5 million Tugrig dollars (US$1,300) once mining production starts. It will also set up a 'Gift of the Motherland' fund similar to the Alaska Permanent Fund, which pays dividends to the state's residents from oil revenues."
read more: International Herald Tribune
6/26/2008
GIC, Temasek may be allowed to pick up 10% each in ICICI Bank
"We have no issues with GIC and Temasek picking up stakes separately in ICICI Bank," government sources said. The two investment firms would however require the Reserve Bank of India's approval. GIC and Temasek would together hold 20 per cent stake in ICICI Bank, if RBI gives its nod. Earlier, the central bank had objected to the move stating the two entities cannot be treated separately as both were investment vehicles of the Singapore government. As per the Reserve Bank guidelines, an overseas portfolio investor can hold a maximum of 10 per cent stake in an Indian company.
read more: The Economic Times
6/23/2008
Singapore's Temasek Holdings donates U.S. $1 million to quake devastated China
Ho Ching, the executive director and chief executive officer (CEO) of Temasek Holdings, handed over a check of 1 million U.S. dollars to the Chinese embassy on Monday for the devastating earthquake that jolted China on May 12.
Ho, also the wife of Singapore's Prime Minister Lee Hsien Loong, said the money represented the sympathy of Temasek Holdings for the Chinese government and people, especially the people in worst-hit Sichuan province, and hoped the money could contribute to reconstruction.
read more: China View
6/20/2008
6/19/2008
Approaching 4 trillion USD in assets
As current account surpluses grow and oil prices increase, SWFs are approaching 4 trillion USD in assets. They will continue to invest heavily in their own infrastructure and emerging markets around their region. We can expect more opportunistic investing in distressed firms as well, especially in the financial services sector.
read more: Fund Rankings
6/18/2008
Congressional Record - US Rep. Marcy Kaptur, [D-OHIO], America needs to recapture its independence from foreign interests
Record by US Representative Marcy Kaptur from Ohio,
Washington D.C., 11 June 2008
CSPAN Video Link
Summary
Ms. KAPTUR. Mr. Speaker, today the New York Post reported that a foreign government in the form of the Abu Dhabi Investment Council plans to buy the Chrysler Building, a New York City landmark, for more than $800 million, continuing a trend of foreign government buyouts of American business, real estate and assets. This is the same sovereign wealth fund that bailed out Citigroup earlier in this year. Recall Citigroup, America's biggest bank and a key player in recycling international petrodollars
and a holder of enormous debt from the subprime lending crisis.
Abu Dhabi is jointly owned by the Abu Dhabi Investment Authority and the National Bank of Abu Dhabi. The former chairman is Sheik Khalifa bin Zayed al-Nahyan, who is pictured here on the poster with President Bush. The Sheik is the President of the United Arab Emirates and the ruler of Abu Dhabi. This is not just a foreign executive buying up an American icon building. This is the ruler of a foreign country.
For those who are opposed to the American government owning private property, allowing foreign governments, and I underline that, to own America's priceless assets should be anathema. But the same people who advocate less U.S. Government involvement surely cannot support the meddling of undemocratic governments such as Abu Dhabi in buying up America's assets.
U.S. Treasury Secretary Paulson went to Abu Dhabi earlier this month to put stardust on the state of the U.S. economy, assuring the Sheik that the United States encourages these types of foreign government investments and buyouts, even while the Secretary advocates a smaller role for the U.S. Government in our own country. Does this make any sense?
Abu Dhabi's investments are particularly alarming, because in addition to the Authority and Council being state-run and perhaps the largest such funds in the world, they are among the least transparent sovereign wealth funds. According to the Sovereign Wealth Fund Institute, there is a ranking of the transparency of who really owns these funds and whose money is in there and what is that money doing.
Abu Dhabi and the UAE are at the very bottom, at the very bottom. They are the least transparent of global sovereign wealth funds. The Authority in particular has a reputation for intense secrecy, without even an internal communications department. The fund is state-run and ``does not answer to a wide public at home,'' said David L. Mack, a former United States Ambassador to the United Arab Emirates.
How would this fund stand up to the regulations we have in place here in our own country? Would this fund be legal in the United States? How is this fund supportive of democratic principles? Abu Dhabi and the UAE are not democratic places. Without even asking these questions, this oil-hungry administration courts these investors personally.
Of course, sovereign wealth funds are not just in the UAE. Kuwait, Qatar and Boston Properties purchased the GM Building earlier this week. Do you see the pattern? Nor are these funds limited to the oil-rich Middle Eastern countries. In fact, one of the largest funds is Norway's. But that country, a democracy, has perhaps the most transparent and conventional investment strategy. They are at the top in terms of transparency and normal Western business and law practices.
China, Saudi Arabia and many funds, such as those of the UAE, invest unconventionally, are very secret. They are not transparent, even when countries like Norway set an example of responsible investment.
As our trade deficit swells even more, in April it deepened even more, to $60.9 billion in one month, America cannot afford to sell off any more of our country. We need to reduce our dependency on oil, balance our trade accounts and invest in our own country so that undemocratic and secretive foreign governments do not buy out our heritage. We need to recapture America's independence and stand on our own two feet again. It will require sacrifice and discipline and responsibility.
Freedom's clock is really ticking for this generation. Are we going to hear it? Are we going to hear it?
Mr. Speaker, I include the June 11, 2008, New York Post article entitled ``Chrysler Building on the Block'' for the Record.
This data was obtained from the C-SPAN
read more: CSPAN
6/17/2008
Banks and SWFs - Barclays
The large banking institutions of the world continue to seek capital to sustain their operations. British bank, Barclays looks to some Asian sovereign wealth to raise 4 billion pounds. According to the Times, “It is thought that at least six potential investors are in talks with Barclays and it is likely that three of these interested parties will be selected. The first opportunity is being offered to the China Development Bank and Temasek, a Singaporean government investor. Both of these funds have already bought shares in the British bank at a price far higher than 318p and are sitting on big paper losses.”
read more: The Times
6/12/2008
Hosted by the CFA Society of Sacramento and the Sovereign Wealth Fund Institute
21 August 2008
CalPERS
Sacramento, CA, United States
The event will be held at CalPERS in Sacramento, CA. Topics such as the origins of sovereign wealth will be covered and how they continue to influence the global capital markets. Current trends, such as asset allocation and SWF behavior will also be touched. And lastly, transparency issues of the sovereign market will be covered.This is an information session that will be around 1 hour long that will be open to Q&A afterwards. Admission is free but space is limited.
We would also like to give thanks for the CFA Society of Sacramento for working with us.
If you wish to attend please email us at: swfinstitute@swfinstitute.org
Please RSVP before July 12, 2008 and put Sacramento Event in the subject line.
Who might want to attend
- Sovereign wealth fund representatives
- Government officials
- Chief investment officers
- Senior portfolio managers and analysts
- Private equity professionals
- Academics
read more: Sacramento Event
6/11/2008
Mumtalakat Holding Company aspires transparency
Commenting on the Linaburg-Maduell Transparency Index rating of Mumtalakat Holding Company, Shaikh Mohammed bin Essa Al-Khalifa, Chief Executive of the Bahrain Economic Development Board (EDB), said 'In this current economic climate, openness in all areas of finance is essential to drive investor confidence. This endorsement of Mumtalakat from the Sovereign Wealth Fund Institute is a strong reflection of what Bahrain offers as a transparent and well regulated finance centre.' Talal Al Zain, Chief Executive of Bahrain Mumtalakat Holding Company, commented 'Mumtalakat has always been open and transparent in its holdings and investment strategy. We remain committed to expanding the company's investments internationally whilst demonstrating our commitment to the highest standards of transparency and accountability.'
read more: AME Info
6/11/2008
read more: Transparency Index
6/9/2008
Oil fuels commodity-based Sovereign Wealth Fund growth - Proved oil reserves at the end of 2006
Sources: BP Statistical Review of World Energy June 2007, Sovereign Wealth Fund Institute
6/5/2008
Mubadala gets a 6 in Transparency Rating
The Mubadala Development Company gets a 6 in transparency rating as they continue to provide the Public with information regarding portfolio holdings, an informative website, and contact information.
read more: Linaburg-Maduell Transparency Index
6/4/2008
Clearer picture on SWFs
According to IR Magazine, a leading investor relations publication, “The perception of SWFs may improve in the future. ‘I think that CEOs and management will actually like SWFs because they tend to be long-term investors,’ says Michael Maduell, founder of the Sovereign Wealth Fund Institute. ‘Historically they have taken a non-voting position and, if faced with what seems to be a sensitive investment to the host country, they will take non-voting shares.’”
read more: IR Magazine
5/30/2008
Disclosure of sovereign wealth enterprises and critical sovereign wealth fund identifiers
By Carl Linaburg
The initial thought that may be credited to the development of the Linaburg-Maduell Transparency Index was to offer simple principles of disclosure that sovereign wealth funds could use to increase levels of trust shared among the public of the economies they invest in. By following simple measures of our transparency index our hopes would be for funds to follow in suit without being told what to do by an internationally drafted agreement.
Major hurdles have been found during months of attempting to identify sovereign wealth funds and their enterprises. The 10-point index that we created does not give negative points or penalties for failing to disclose certain critical items, which is why we stress a score of 8 to be considered adequate in transparency. In correlation with ever-changing sovereign wealth funds our transparency index will change in terms of rating and principles.
While some funds are easy to assess others have discombobulated government structures, identify their enterprises on one-way roads, fail to identify their enterprises, or flat-out deny their status as a sovereign wealth fund altogether. Most sovereign wealth funds tend to not disclose their international holdings in order to avoid confrontation with the public. Contingent pension reserve funds such as the Government Pension Fund-Global of Norway and the New Zealand Superannuation Fund are required to disclose this type of information usually by law. Some entities, particularly in Asia but not limited to Singapore’s Temasek Holdings, deny being a sovereign wealth fund altogether. Many funds do not want to be lumped in as sovereign wealth funds; especially if an international agreement is to be adopted forcing them to undergo increased compliance. In the case of Temasek Holdings, their argument against being a sovereign wealth fund lies in lack of government control. Their argument is not within our scope of the definition. What does identify Temasek Holdings as a sovereign wealth fund are other key factors: establishment by government authority, funding source, and types of investing. The disclosure of funding source is partially disclosed for The National Council for Social Security Fund for the People’s Republic of China (NSSF). From the official website of the NSSF a financial statement from 2004 reveals the funding source. Funding source disclosed from this statement is identified as ‘The National Social Security Fund, whose sources include the fiscal allocation of the central government, capital and equity assets derived from reduction of state-owned shares, capital raised in other manners with approval of the State Council and investment proceeds’. The State Administration of Foreign Exchange (SAFE) is responsible for the management of China’s foreign exchange reserves. SAFE owns a Hong Kong subsidiary called the SAFE Investment Company which makes purchases in foreign equity investments, such as investments in the French oil company Total.
The Sovereign Wealth Fund Institute recently gave a new label to a certain type of sovereign wealth fund subsidiary. Sovereign wealth enterprises are subsidiaries that complete the objectives of the parent sovereign wealth fund, which usually involves investment in international equity. These enterprises are not a new phenomenon and the amount of sovereign wealth enterprises are hastily increasing. The government structures of these enterprises originate from government authority to sovereign wealth fund to subsidiaries and enterprises. Sovereign wealth enterprises are owned indirectly through the sovereign wealth fund, where some or the entire funding source is derived. An example of a similar structure can be found through Jafza International. The funding for this organization may come from capital borrowed from non-governmental financial institutions, but given that these organizations are indirectly established through a sovereign wealth fund; this is unlikely the case. The official website of Dubai World, a subsidiary of the Investment Corporation of Dubai, lists Jafza International as one of its featured companies. Dan Chapman of the Atlanta Journal Constitution in his article ‘Hope, suspicion as countries fat with cash invest in America’, noted earlier this month the investments of Jafza International in the United States. Dubai World argued his statement regarding direct government control of Jafza International by UAE government officials. While Jafza International may not be directly controlled by the government there are other factors to note. Through the legal disclaimer of Jafza International visitors are notified that ownership lies with their parent organization Economic Zones World FZE. The Economic Zones World official website does not disclose a parent organization in its legal disclaimer. On page 10 of their prospectus, Economic Zones World FZE broadly identifies governance structure as the following:
The use of a sovereign wealth enterprise makes sense. Although governance structure may be confusing to some, there are only issues in regards to transparency when pertinent information regarding association to the sovereign wealth fund is left out and when disclosure of these types of associations goes down a one-way street. The inclusion of penalties in transparency assessment, for sovereign wealth funds that fail to disclose critical information, is unnecessary. Sovereign wealth funds need to not be worried about the negative connotation of being labeled as a ‘SWF’, but they need to be aware of the dangers of covering their tracks. When attempts to avoid confrontation are foiled, there will be severe distrust.
The views in this publication are expressed by Carl Linaburg.
Carl Linaburg is the Cofounder and Vice President of the Sovereign Wealth Fund Institute.
www.swfinstitute.org
Back to Carl Linaburg's Research
5/30/2008
Sovereign Wealth Enterprise
Sovereign Wealth Enterprise - A sovereign investment vehicle that is owned and controlled by a sovereign wealth fund.
FAQs
1. Why do Sovereign Wealth Funds (SWF) create Sovereign Wealth Enterprises (SWE)?
A: There are a variety of different reasons. One is for flexibility. A sovereign wealth fund could have a strict investment mandate in place; however, the sovereign wealth enterprise has its own rules. For instance, many public pension funds are unable to short stocks. To get around this they can hire an external manager to manage a portfolio that could have a long-short strategy.
A second reason could be transparency. If a sovereign wealth fund has hundreds of sovereign wealth enterprises, it is harder to track their holdings. Lastly, is to avoid being lumped into the same category as a sovereign wealth fund and avoid the public spotlight.
2. How large are Sovereign Wealth Enterprises (SWE)?
A: We are not certain of the aggregate asset size of sovereign wealth enterprises but they cannot be larger than the total size of sovereign wealth funds since they are merely a component of some sovereign wealth funds.
3. Is a State-Owned Enterprise (SOE) the same as a Sovereign Wealth Enterprise (SWE)?
A: A SOE can be considered a sovereign wealth enterprise if it is directly under the control of a Sovereign Wealth Fund.
5/28/2008
Canada defends as some are lumping Sovereign Wealth Funds with Public Pension Funds
It is true the Canada Pension Plan Investment Board (CPPIB) is a sovereign investment vehicle but it is not a sovereign wealth fund. There is a significant difference between the two investor classes and the lines should not be blurred. Public Pension plans are funded by employee contributions not shifts in foreign exchange assets. According to the Financial Times, “David Denison, president and chief executive of the fund, said: ‘We fear collateral damage. Many sovereign wealth funds are new and don’t have a track record to show they invest on a commercial basis. But we have transparent approval processes and commercial decision-making.’
Mr Denison said the C$123bn of assets did not come from the government but from the retirement money of 17m Canadians and that the board of directors was totally independent with no political appointees to the fund.”
read more: Financial Times
5/27/2008
US House Committee on Foreign Affairs - Sovereign Wealth Funds, Oil and the New World Economic Order
On May 21, 2008, the Institute for the Analysis of Global Security (IAGS) testified in front of the US House Committee on Foreign Affairs on sovereign wealth funds.
SWF Research Link
read more: US House Committee on Foreign Affairs
5/23/2008
Tough Equity Markets affects the Norwegian Government Pension Fund – Global
Index-type investors face trouble as the equity markets were greatly effected by various economic events such as the credit crisis. They lost around US $15 billion in the first quarter of 2008. According to Norges Bank which manages the fund, "The first quarter of 2008 was dominated by the financial turmoil that began with problems in the US mortgage market in early 2007 and subsequently developed into a wider crisis in parts of the financial system. Equity markets fell sharply during the quarter, while fixed income markets generated a positive return.
The return on the Government Pension Fund - Global in the first quarter of 2008 was -5.6 per cent in international currency."
First Quarter Report 2008 - NBIM
read more: Norges Bank
5/23/2008
Brazil SWF might be delayed causing the Real to appreciate against the US Dollar
Rumors have it that Brazil might delay the creation of its sovereign wealth fund after all. Brazilian President Luiz Inacio Lula da Silva is considering whether it would be better to start a wealth fund or reduce government debt and trim taxes. This is an issue that many emerging economies face as they continue to build a surplus of wealth. According to Dow Jones, “Brazil's real opened stronger against the U.S. dollar Friday on news the government will delay the launch of its sovereign wealth fund and amid rising oil prices, which are undermining the dollar.”
read more: FX Street
5/19/2008
KIA warns Germany not to regulate Sovereign Wealth Funds
The Kuwait Investment Authority (KIA) has invested in Germany for decades. Now that sovereign wealth funds are growing in asset size, it seems that politicians are worried about their economic power and possible strategic or political intentions. The KIA managing director, Sheikh Badir al-Saad expressed concern over the possibility of increased German legislation on sovereign wealth funds. According to Thomson Reuters, “The German government plans to extend existing legislation that gives Berlin a veto on takeovers of defense firms to include other industries, though Steinbrueck has said Germany does not want to scare off sovereign wealth funds.”
read more: Thomson Reuters
5/14/2008
Brazilian real devalues against USD after sovereign wealth fund announcement
The Brazilian real opened weaker against the U.S. dollar Wednesday on news that part of the dollars for the country's new sovereign wealth fund will be provided by Brazilian Treasury bond issues. The real opened at BRL1.670 to the dollar in spot contract trading on the Brazilian Mercantile and Futures Exchange after ending at BRL1.656 to the dollar Tuesday. The central bank already regularly buys dollars to build reserves, and news that the Treasury will also act pressured the local currency and opens the possibility of conflicts between the two institutions. The fund will be used to contain cyclical volatility in the Brazilian economy and support Brazilian bond and debenture issues. Finance Minister Guido Mantega did not specify how large the fund might be.
read more: FXSTREET
5/14/2008
SOFAZ exhibits a high rating in transparency
After reassessment, the Sovereign Wealth Fund Institute received up-to-date reports audited by Ernst & Young for SOFAZ, Azerbaijan's state oil fund. Reports revealed a wealth of information including external managers Clariden, and Deutsche Asset Management that upgraded the fund to a 9.
read more: APA
5/13/2008
Thailand considers setting up a sovereign wealth fund
Thailand has reserves stemming from non-commodity sources. The central bank is seeking a feasibility study to see if it is beneficial or not to invest their foreign reserves into other asset classes. Another hot topic in the discussion is to see whether the fund would seek strategic controls in companies or to just purely seek higher investment returns.
According to the Nation, “The Bank of Thailand will conduct a thorough feasibility study before making a decision on whether to establish a sovereign wealth fund, Governor Tarisa Watanagase said last week.”
read more: The Nation
5/10/2008
China Investment Corporation sees advantages in the Global Crisis
According to Thomson Reuters, “’The current international market turbulence has produced unprecedented investment opportunities,’ said Lou Jiwei, head of the $200 billion sovereign wealth fund, established last September to earn higher returns on part of China's vast official foreign currency reserves.
But Lou told a financial conference in Shanghai that CIC would not try to take advantage of the turbulence by acting as a hedge fund and betting on the performance of the economies of individual countries.”
Sovereign wealth funds continue to act as economic stabilizers in the financial markets. Funds like CIC, Abu Dhabi Investment Authority, and the like continue to look for great investment opportunities for the long haul.
read more: Thomson Reuters
5/5/2008
International Working Group of Sovereign Wealth Funds is Established to Facilitate Work on Voluntary Principles
The IMF states "an International Working Group of Sovereign Wealth Funds (IWG) was formally established by the meeting to present by October 2008 a set of SWF principles that properly reflects their investment practices and objectives."
read more: IMF
5/1/2008
Added new SWF from Bahrain
Established in 2006, Bahrain Mumtalakat Holding Company is the chief investment division of the government of Bahrain. The primary funding source of wealth comes from oil. Currently, their investment portfolio is heavily weighted into the local Bahrain economy in a number of industries ranging from real estate to telecommunications.
4/28/2008
Saudi Arabia plans to launch U.S. $5.3 billion SWF
Saudi Arabia’s Public Investment Fund is in the “final stages” of launching the kingdom’s first sovereign wealth fund. But its early financial commitment will disappoint those hoping for another megafund.
Mansour Al-Maiman, secretary- general of the internally focused PIF, said an investment company wholly owned by PIF would be set up with initial capital of SR20bn ($5.3bn).
read more: Financial Times
4/28/2008
US Senate Committee Hearing on Sovereign Wealth Funds
The US Senate Committee had a hearing on the Turmoil in U.S. Credit Markets: Examining the U.S. Regulatory Framework for Assessing Sovereign Investments.
David Marchick, a Managing Director and Global Head of Regulatory Affairs of The Carlyle Group said, "Second, the United States has a robust, layered set of laws and regulations that protect important governmental interests associated with any investment, sovereign or otherwise. FINSA protects against threats to national security, and CFIUS has demonstrated its willingness to block or mitigate problematic investments. DOD has its own set of regulations to protect the defense supply chain and classified information. Hart-Scott-Rodino triggers antitrust reviews for any significant acquisition.
And in any sensitive sector, there are a host of laws and regulators that provide additional protection. In the chemicals industry, for example, there are five federal regulators focused on safety, security, transportation and other issues; several state-level regulators; and more than a dozen federal statutes that impose various, wide-ranging controls on chemical investments and operations. The Fed, Treasury, OCC and OTS scrutinize investments in the banking sector. Similar laws and regulatory oversight exist in the telecommunications, energy, pharmaceutical, and transportation sectors, among others. Even if there were cause for concern associated with sovereign wealth funds, our existing legal and regulatory structure should capture and fix – or block – any problematic investments. "
read more: US Senate Committee
4/22/2008
KIC gets an upgrade to a 9 in Transparency Rating
The Korea Investment Corporation (KIC) gets an upgrade from an 8 to 9 in transparency rating as they listed their external managers and increased essential information to their fund site.
read more: Linaburg-Maduell Transparency Index
4/22/2008
US Treasury- Proposed Regulation on Mergers, Acquisitions, and Takeovers by Foreign Persons
"Washington, D.C.--The Treasury Department today issued proposed regulations that implement the Foreign Investment and National Security Act of 2007 (FINSA). The proposed regulations provide an update to regulations issued in 1991 that govern the Committee on Foreign Investment in the United States (CFIUS) and its process for national security review of certain foreign investments in U.S. businesses. They reflect reforms made to the CFIUS process by FINSA and the CFIUS executive order issued by President Bush on January 23 of this year.
'These regulations reflect America's strong and continued commitment to safeguarding U.S. national security in a manner that reinforces the longstanding U.S. policy of welcoming foreign investment. The proposed regulations increase clarity and make additional improvements based on experience,' said Assistant Secretary for International Affairs Clay Lowery."
4/21/2008 - US Treasury- Proposed Regulation on Mergers, Acquisitions, and Takeovers by Foreign Persons
read more: US Treasury Press Release
4/21/2008
India might create reserve investment corporation
During a speech last week in Washington, the Governor of the Reserve Bank of India, Yaga Vednugopal Reddy reinforced beliefs that India has been in the works of creating a reserve investment corporation, a type of sovereign wealth fund. In his speech, Yaga Vednugopal Reddy stated that India’s foreign currency reserves, which currently stand as the World’s fourth-largest, are inhibited by the Reserve Bank’s policy of low risk and liquidity. Reddy continued his statement with, “Given the limitations placed on the central bank by its mandate, it will be appropriate to bestow this responsibility on a different sovereign entity.”
The type of sovereign wealth fund presumed to be created is a reserve investment corporation, which manages non-commodity based assets to increase returns on reserves. These assets, in the form of excess foreign currency reserves, were reported this past February by the IMF to be valued at U.S. $301.235 billion [1]. The goal of the presumed Fund will be to earn higher returns through diversifying into equity investments rather than lower risk investments such as treasury bonds.
While Reddy’s speech expressed concerns of dynamic risks involved with managing a sovereign wealth fund, India has a bit of experience in the world of sovereign investment vehicles. The India Infrastructure Finance Company Limited (IIFC), established in August of 2004, provides long-term debt for financing world-class infrastructure in India. India’s Prime Minister, Dr. Manmohan Singh sits as chairman of the IIFC. The Ministry of Finance of India is credited for the creation of the IIFC after deliberations with the Planning Commission, and financial institutions. The creation of the IIFC was approved by the committee on infrastructure. This vehicle, which prefers Public Private Partnership Projects, has experience with raising funds from domestic and external markets and lending up to 20% of the needed capital for infrastructure projects. Aside from equity, the IIFC raises long-term debt through currency debt raised on the open market, debt from multilateral and bilateral institutions, and foreign currency debt through external commercial borrowings.
Although the IIFC differentiates itself on a multitude of levels from a sovereign wealth fund, there are high levels of experience that may be related to managing a new sovereign entity. One may question whether or not the IIFC is ready to take on the new responsibility of managing a sovereign wealth fund, but without the use of external managers there is no other internal government-owned authority more appropriate for the job.
The views in this publication are expressed by Carl Linaburg.
Carl Linaburg is the Cofounder and Vice President of the Sovereign Wealth Fund Institute.
www.swfinstitute.org
Back to Carl Linaburg's Research
4/15/2008
Japan Finance Minister buys off on SWF Code of Conduct Concept
Many of the G-7 countries are signing on to the idea of a code of conduct for sovereign wealth funds as some of the sovereign funds continue to protest the concept. At an IMF meeting, the Japanese Finance Minister Fukushiro Nukaga said "I support the IMF's action to make full use of its experience in monitoring movements in international capital flows, and formulate best practices in the areas of governance, institutional arrangements and transparency."
read more: Japan Times
4/11/2008
Arnold Schwarzenegger, the Governor of California opposes divestment bill for Pension Funds regarding Sovereign Wealth Funds
UPDATE: The bill has been withdrawn due to little support.
The Governor of California makes the case of why this divestment bill will be ineffective and will only end up hurting pension investors.
read more: LA Times
4/7/2008
60 Minutes on the China Investment Corporation
The Sovereign Wealth Fund Institute contributed information to CBS News 60 minutes for this segment that was aired on April 6th, 2008.
4/4/2008
China's FX Manager makes a French Investment
The State Administration of Foreign Exchange (SAFE) which manages China’s foreign reserves which are worth around US$1.65 trillion is acting more like a sovereign wealth fund these days. It has recently acquired a large stake of around €1.8 billion in the heavily capitalized French oil company Total.
4/4/2008
Another New SWF Joint Venture Fund
The Vietnamese State Capital Investment Corporation and Qatar Investment Authority have set an agreement to create a US$ 1 billion investment fund to invest in Vietnamese companies. We believe that Vietnam is trying to open up its vast number of state owned enterprises to foreign investors.
Mar 2008
Feb 2008
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