This post is coming to you live from one of those insane water slides that launch very bored and highly resourceful people into lakes out in Middle America. Basically, I’m right here...but in my mind. On that note, here’s the news:
- A Good Tipper? After Goldman Sachs helped Malaysia’s development fund, 1MDB, raise roughly $9.5 billion dollars in debt, it reportedly got paid $876 million in fees, commissions and expenses. That fact is apparently not in dispute. What is disputed, however, is why Malaysia’s sovereign development fund paid such an insane amount for what seemed to be a fairly competitive bond offering.
- Diaspora Wealth Funds: Rwanda continues to show success in its attempt to build the world’s first crowdfunded sovereign fund! Kudos for creativity.
- The End is Nigh: The Australian Future Fund has $20 billion, or 18 percent, of its assets under management sitting in cash. The sovereign wealth fund is also reportedly stocking up on canned goods, bottled water and AA batteries.
- Shooting The Lights Out: The U.K.’s Pension Protection Fund returned nearly 26 percent over the latest fiscal year. That’s pretty good.
- The Fee Machine I: I’ve suspected for a while that certain pension funds and their sponsors are afraid of the popular — that is, voter — backlash that would come if the general public learned of the actual fees that pensions pay to external asset managers. Well, apparently New Jersey Governor Chris Christie is just such a politician. And the next shoe to drop will likely be in Sacramento, where CalSTRS and CalPERS are under increasing pressure to reveal the carried interest they pay to general partners. As my Oxford colleague Professor Ludovic Phalippou recently said, “CalPERS’ total bill is likely to be astronomical. People will choke when they see the true number.” Yes they will. And don’t think for a second that CalPERS is alone in this...
- The Fee Machine II: As we’re on the precipice of a major revolt against fees paid to private equity general partners, it’s interesting to note PGGM’s huge, direct private equity deal in LeasePlan. According to The Wall Street Journal, this deal was an explicit and overt rejection of the high-fee model. Fingers crossed it goes well.
- The Fee Machine III: Thirteen public pensions have asked the SEC to require clear and consistent fee disclosures from private-equity managers. I endorse this and would like to make another suggestion: Pension funds should demand transparency into the “general ledgers of general partners’ management companies.” This, friends, is the holy grail. General partners will fight hard to prevent you from getting it but sadly, you really can’t get a sense for how much they are making without it. The general ledger of a fund is pretty worthless, as general partners are adept at ensuring all the cash flows through to the management company.
- Pension Geography: After a decade of refusing to establish overseas offices, PSP Investments is apparently setting up some overseas offices. The Canadian giant’s new CEO, Andre Bourbonnais, is clearly taking a page out of his old CPPIB play book.
- New sovereign wealth funds: Taiwan is looking to combine its four big state funds into a new $225 billion sovereign fund in order to increase efficiency.
Have a great weekend...