Cathay Life Insurance, Taiwan’s biggest insurer with over $140 billion in assets under management, is placing bets on real assets.
The institution expects to increase its $3 billion alternative assets portfolio – which comprises a mixture of private equity and hedge fund investments – to around $4 billion in the next year, a source within the organisation told sister publication Private Equity International.
“We increased our private equity [and hedge fund] exposure continuously in the last few years to have as much as $3 billion commitment at this point, and will keep expanding the portfolio going forward. Our plan is to increase the portfolio from $3 billion to $4 billion for 2017,” the person, who declined to be named, told PEI.
Cathay Life allocates about 2 percent of its overall portfolio to private equity and hedge funds, with the majority of its assets invested in fixed income, public equities as well as domestic and foreign bonds. Its private equity portfolio includes real estate and infrastructure funds.
Infrastructure investments represent 10 percent of the insurer’s buyout holdings, according to Infrastructure Investor Research & Analytics. Taiwanese regulation forbids the institution is now allowed to make direct investments.
Last month, alongside Swiss-based Partners Group, Cathay Life agreed to acquire a minority stake in a greenfield solar platform that aims to develop 550MW worth of projects in Taiwan over the next three years. Once completed, the portfolio will benefit from a 20-year power purchase agreement with the island's state-owned utility.
The deal came shortly after the recently elected government of Taiwan stated its ambition to triple the island's installed solar capacity to 20GW by 2025.
Cathay Life has also committed €50 million to Macquarie European Infrastructure Fund 5, which the Australian manager is currently raising with a target of €2 billion, according to Infrastructure Investor Research & Analytics.