Global Investing

Water investments

A growing number of Investors, including state-owned funds, are looking to invest in water to benefit from efforts to tackle climate change.

According to multi-asset manager Armstrong Investment Managers, less than 0.01 percent of water is easily accessible freshwater and global water use has tripled since 1950 — increasing faster than the world’s population.

“Demographic and climate changes will lead to two thirds of the population inhabiting areas with scarce water,” the firm says.

Armstrong likes water equipment and water treatment stocks and water utilities as these should benefit from sustainable growth opportunities.

Norway’s $350 billion sovereign wealth fund is aiming to invest 20 billion crown ($3.24 billion) investments over the next five years into water and other environmental technologies, such as carbon-capture storage and waste and pollution management.

from MacroScope:

SWF 2.0

The easing of the credit crisis is giving way for a new generation of sovereign wealth funds.

Japan, Taiwan, Thailand, Bolivia, Nigeria, Canada are just some of the places where a public debate has begun on establishing some form of sovereign wealth fund. And even Scotland is now looking at establishing such a fund to manage oil wealth.

China is also close to launching an agency to restructure and consolidate state-owned enterprises -- dubbed by Chinese media as CIC 2.0 in reference to the country's $200 bln SWF China Investment Corp.

Is it time for a Scottish wealth fund?

Oxford SWF Project, a university think tank on sovereign wealth funds, is looking at reports that the latest entry in the field could be Scotland. The project has a new post about the Scottish government floating the idea of an oil stabilisation fund to use oil and gas revenues.  It cites Scottish cabinet secretary for finance John Swinney looking abroad gleefully:

“We want to harness the benefit of oil revenues now for future years. An oil fund can provide greater stability, protect our economy and support the transition to a low carbon economy. Norway’s oil fund is worth over £200 billion – despite the first instalment being made as recently as the mid 1990s – and Alaska’s oil fund even gives money back to its citizens every year.”

The SWF project reckons the idea is a good one, but wonders if something other than meets the eye is at play. It had two questions.

from DealZone:

“Tourists” arrive in private equity

Opportunistic buyers, lovingly dubbed "tourists" by those in the industry, have moved into the secondary private equity market. They're looThe cruise ship from Mediterranean Shipping Company Musica dwarfs Via Garibald as it arrives in Veniceking for positions in brand-name private equity funds at knock-down prices. As I wrote in a DealTalk today:"Pension funds and wealthy middle-east sovereign wealth funds are buying up investments in private equity funds, pushing up prices and sidelining secondary firms that specialise in acquiring the assets."The market for second-hand private equity assets -- where private equity investors offload assets to specialist buyers -- has mushroomed as the credit crisis has intensified. And increasing numbers of cash-strapped investors are concerned about meeting their future commitments to buyout funds."New investors have been attracted to deals by steep discounts to net asset value, forcing up prices for specialist buyers, such as Goldman Sachs (GS.N) and HarbourVest Partners (HVPE.AS) that last month closed secondary funds after reaching their $5.5 billion and $2.9 billion targets respectively."Read the full piece here.

How to Spend It – for sovereign wealth funds (2)

On our way to a meeting in London with a senior official of a sovereign wealth fund from an emerging market country, my colleague and I came across a van from a company called Sovereign Recovery.

How timely, we thought, given the billions of dollars emerging sovereigns have had to pour into local markets to revive their economies hit by sudden drainage of foreign capital by the credit crisis.

 The company, of course, is not engaged in any of sovereign economic recovery work — they are motor engineers who have contracts with leading transport operators including Transport for London.

How to Spend It – for sovereign wealth funds

As dust settles and investor morale improves, sovereign wealth funds are slowly coming back to the market.

But they are not going to simply repeat what they’ve done in the past few years — hunting bargains in everything from property to banks. They are likely to carefully balance out the temptation for higher returns and the need to invest in strategic assets which benefit their own economies.

The so-called “south-south” trade is set to gather pace, providing much-needed capital inflows to emerging markets.

Of Seaweed, South Seas and Sovereign Wealth

kiribati_boat.jpgSovereign wealth funds get a lot of press these days with
their potential for rich investment and the fear in some
quarters that they could bring foreign government influence into
domestic economies.

But State Street Global Advisors reminded us during a chat
today that SWFs are nothing new. John Nugee, who manages the
investment house’s SWF business, noted that Kuwait established
the Kuwait Investment Board (now Authority) as far back as 1953,
eight years before the country’s independence.

For those who really like their investment history, Nugee
also offered up the tale of Kiribati’s Revenue Equalisation
Reserve Fund. This SFW is a trust, set up in 1956 when Kiribati
was still the Gilbert Islands and under British rule. It
gathered the earnings from the islands’ phosphate deposits to
protect against the time when — now — there were none left.