Here now, the news:
- Sanctions: The US has reportedly placed the Russia Direct Investment Fund on a list of its sanctioned entities. This is pretty significant, as the RDIF had very deep ties to mainstream American financiers and academics — Steve Schwarzman, David Bonderman and Josh Lerner are but three of the high-profile Americans that were, at least at one point, on the fund’s advisory board. I’m guessing they are no longer ...
- New SWFs I: India is reportedly launching a new sovereign fund called the National Investment and Infrastructure Fund (NIIF). It will apparently be modeled on Singapore’s Temasek and operate entirely at arm’s length from the government. According to Minister of State for Finance Jayant Sinha, “We will be hiring the best talent in the world for this institution so that they can assess and evaluate a variety of investment opportunities using the most sophisticated valuation techniques.” I admit, that sounds like a very good start.
- New SWFs II: Papua New Guinea has indeed finally passed its Sovereign Wealth Fund Bill. But hold your horses a second. This process has been going on for five years ... don’t go booking tickets to Port Moresby just yet.
- Direct Investing: The China Investment Corporation’s new direct investment arm, CIC Capital, is officially up and running. It has plans to scale to $100 billion from its current level of $5 billion.
- Compensated: Most public pension employees are woefully underpaid when compared to their peers in the private sector. To me, this is astonishing when you consider the sheer value these individuals can either add or destroy as a result of their choices and actions. Why do we pay peanuts to the people at the very foundation of our capitalist system (i.e., the asset owners)? As I’ve said before, the highest paid pension fund employees on earth make 1000 times less than the highest paid hedge fund and private equity managers. And, don’t kid yourself, the two points are intimately connected. The managers make more, because the pension employees make less. We as a society (or at least polity) have, in effect, chosen to overpay our external managers because we simply don’t have the stomach to pay public employees generously (that is, unless the public employees coach football or basketball — sigh). But if we’re going to refocus our capitalist system on long-term value creation — instead of continuing on our current trajectory towards quarter to quarter rent seeking — we’re going to need well-resourced and highly talented long-term investors in the form of pensions. The good news, significantly, is that two US pension funds have made meaningful moves to change their compensation policies. This should be celebrated and copied. So, two down and just two thousand or so to go ...
- Overseas Offices: Malaysia Khazanah is the latest sovereign fund to set up an office in London. In case you’re wondering, here’s a reminder of why these public funds are expanding overseas.
- Outer Space! Dude, we’re investing in space, man. For real.
Have a great weekend!
