Side Letter: Fund admin feeding frenzy; Korea’s MMAA names CIO; Sig Guff’s EM close

Fund admin businesses are hot property, with Apex Group and Cinven among those pursuing targets. Plus: Siguler Guff has closed its first direct investment EM fund and PE buyers are looking to strike a German football deal. Here's today's brief, for our valued subscribers only.

They said it

“If the ebb-and-flow of diplomatic relations were allowed to affect foreign investment rules, it would dramatically lift uncertainty for foreign investors and, in turn, a country’s perceived sovereign risk. The higher cost of capital would then reduce economic growth, productivity and living standards.”

Writing in affiliate title Infrastructure Investor, Ross Israel, head of global infrastructure at Australia’s QIC, discusses whether diplomatic relations between two countries should affect foreign investment rules (registration required).

Just happened

Fund admin feeding frenzy
Big news in the world of fund admin: Apex Group, backed by Carlyle Group and Genstar Capital, is set to complete its acquisition of Israeli fund services firm Tzur Management, our colleagues at Private Funds CFO report (registration required). The deal adds $13 billion to Apex’s $1.1 trillion of AUM and another 90 employees. Apex has also bid around $276 million for Aussie fund administrator Mainstream Group.

Such businesses appear to be hot property. UK-listed Sanne Group rejected a £1.35 billion ($1.9 billion; €1.6 billion) buyout offer from Cinven on Friday, calling the proposal “opportunistic and not reflective of the group’s ability to deliver strong operating and financial performance”. Fund admin M&A more broadly has been on the up in recent years, as PEI explored in 2019.

Watch out for our latest Fund Administration Special Report, which will hit desks in June. Topics du jour include the role of technology in revamping due diligence processes, how ESG could impact fund domiciles and key considerations for outsourcing finance solutions.

ESG under scrutiny
The US Securities and Exchange Commission is taking a closer look at ESG under the Biden administration. A Division of Examinations letter obtained by our colleagues at Regulatory Compliance Watch sheds light on precisely what it will be looking for (registration required). Here are some takeaways:

  • The letter asks advisors to define “impact investing” and “any terms” it uses in disclosures and marketing, as well as to describe its “ESG/SRI criteria” and provide written documentation of how it uses these standards.
  • Should the advisor turn instead to “a proprietary scoring system” for ESG, it needs to hand over its methodology and reveal “how often the score is evaluated”, its related written processes and how often investors see the scores.
  • If the advisor used “a third-party scoring system” for its ESG criteria, it had to disclose why it selected that particular system, how the scores were used and “how often the score is evaluated”.

Military Mutual Aid Association, a roughly $11 billion Korean pension scheme, has appointed a new CIO. Lee Sang-hee joins from the $15 billion Lotte Not-Life Insurance, where he fulfilled the same role, per a Korean-language statement. MMAA has a whopping 45.5 percent allocation to alternatives, and has committed to the likes of Oaktree Special Situations Fund II and Mirae Asset Next Korea New Growth Investment, according to PEI data.


Sig Guff’s EM fund
Investment firm Siguler Guff has collected $240 million for its first direct emerging markets fund (press release here). GEMCo, as the vehicle is called, will primarily target China, India and South-East Asia. New York-based Siguler Guff has to date deployed more than $4.5 billion in Asia, Latin America and Eastern Europe through fund commitments and directs.

Striking a deal?
Germany’s top-flight football teams will meet tomorrow to vote on the partial sale of the league’s overseas broadcasting rights to PE buyers. KKR, CVC Capital Partners and PEI Media-owner Bridgepoint have advanced to the second round of an auction that would value the Bundesliga’s media rights at about €2 billion, according to Reuters. Sports transactions are becoming more commonplace in PE as a combination of rising valuations and a need for liquidity turn the industry into an appealing bet.

Dig deeper

Institution: Cathay Life Insurance
Headquarters: Taipei, Taiwan
AUM: NT$6.95 trillion

Cathay Life Insurance has committed a further $300 million across two private equity secondaries vehicles, according to a filing from the insurer.

The commitments comprised of an additional $100 million to Lexington Capital Partners IX, bringing the Taiwanese insurer’s total commitment to the fund to $250 million, and a further $200 million to Strategic Partners Fund VIII, bringing the total commitment to the fund to $250 million.

The Taiwanese insurer’s recent private equity commitments have been to secondaries and venture capital vehicles across diversified sectors in North America and Western Europe.

For more information on Cathay Life Insurance, as well as more than 5,900 other institutions, check out the PEI database.

Today’s letter was prepared by Alex Lynn with Carmela Mendoza.