Pirates Hijack Ship Off the Coast of Somalia

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On Monday, March 13, pirates seized an oil tanker off the coast of Somalia, making it the first successful Somali pirate attack since 2012. Officials are concerned that this is the beginning of a resurge in violence in the region.

But some officials say they aren’t surprised by the attack. Take Gerry Northwood for example. Northwood is the chief operating officer at maritime risk management consultancy MAST. He says that mounting political tensions are responsible for the sudden resumption of pirate activity.

“With the current political situation in Somalia and the increasing confidence of those transiting through the Western Indian Ocean and Gulf of Aden, it was very likely that such an attack was going to occur,” Northwood stated.

Things took a turn for the worse on Thursday, when the pirates exchanged gunfire with Somali maritime forces. A security official said that one soldier suffered critical injuries.

As of now, pirates still retain control over the oil tanker, called Aris 13. A total of eight crewmembers are currently being held hostage.

“The ship and crew will remain safe as long as no one attacks them,” said Bile Hussein, a man who claims to be in touch with the pirates.

Fortunately, Somali pirates are normally in it for the money and the money alone. In other words, so long as they are able to collect some type of ransom, they will likely leave the crewmembers unharmed.

As far as future attacks go, Emma Gordon says there’s no reason to panic. As an analyst at global risk consultancy firm Verisk Maplecroft, Gordan doesn’t believe this particular attack shows any indication that the amount of piracy cases will resemble anything like those seen in 2012 and the years prior.

“Pirates need at least $30,000 to mount complex missions against large commercial vessels. With the rate of success dramatically lower due to international naval patrols, financiers will not want to fund expensive pirate missions.”

Perhaps that provides at least a little bit of reassurance for maritime workers in that area.

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Pensions Turn to Private Equity—But Will it Last?

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The Maine Public Employee Retirement System (MainePERS), the pension fund covering public employees in Maine, has announced it will commit up to $100 million to Owl Rock Capital, run in part by veteran alternative investment manager Marc Lipschultz. MainePERS Chief Investment Officer Andrew H. Sawyer said that the $12.4 billion pension fund approved the commitment via its board, though it’s still subject to due diligence, legal review, and negotiations.

This isn’t the first time Owl Rock has gained a pension fund investor: the Oregon Investment Council, which oversees the Oregon Public Employees Retirement Fund, committed $860 million to six alternative investment funds, including Owl Rock, in June of last year. Of that total amount, Owl Rock received $150 million.

For much of 2016, it was quite popular for pension funds to turn to private equity. This year, however, those golden days are showing signs of slowing down as private equity firms struggle to deploy their record amounts of cash. The Financial Times reported that pension funds and other institutional investors gave only $3.2bn to private equity funds in January and February, compared to the $8.9bn given during the same time last year.

So what’s the reason for the change? According to Amin Rajan, chief executive of Create Research, big investors have turned their attention to private equity because they’re looking for returns in an overall low-yield environment. However, as public offerings decrease, investors are growing concerned about overcrowding in the private equity market.

“Future flows may ease for two reasons,” said Rajan in the Financial Times interview. “Lack of attractive targets and worries about exit strategies due to political risks.”

The lessening of investments this year may also be a reaction to the fact that, of the capital raised by private equities as far back as 2015, more than 80% still needs to be deployed.

Still, the game’s not entirely finished for the relationship between pension funds and private equity. Will Kinlaw, Senior Managing Director at State Street Global Exchange, notes that big investors like pension funds are still interested in private equity even if their investments have dwindled a bit. “Many of our big institutional clients are significantly underweight private equity relative to where they want to be. They are still looking for opportunities,” Kinlaw told The Financial Times.

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Iceland to Become First Country to Require Evidence of Equal Pay

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There’s a reason why Iceland is ranked number one for gender equality by the World Economic Forum. It’s because Icelandic government officials have taken a proactive approach towards making gender-based discrimination illegal.

But despite their best efforts, the gender pay gap still stubbornly persists. And so lawmakers are now looking to introduce a new piece of legislature that would require employers to provide evidence of equal pay.

“The time is right to do something radical about this issue,” said Thorsteinn Viglundsson, Minister of Iceland’s Social Affairs and Equality. “Equal rights are human rights. We need to make sure that men and women enjoy equal opportunity in the workplace. It is our responsibility to take every measure to achieve that.”

The sweeping new measure comes in response to the government’s goal of eradicating the gender pay gap by 2022. It’s an ambitious objective, but Mr. Viglundsson thinks that it can be done.

“You have to dare to take new steps, to be bold in the fight against injustice,” he said.

The new measure has the support of Icelandic Prime Minister Bjarni Benediktsson, who has long declared that, “gender equality benefits us all.” Benediktsson spoke about the plan in New York yesterday, where he attended an International Women’s Day conference.

While other countries have introduced similar measures, none of them have implemented these laws on a national scale. For example, in America, the state of Minnesota has a gender pay equity law. However, it is not a federal mandate.

And so it is, Iceland will become the first country in the world to require employers to provide evidence that they are paying their male and female employees equally. It’s seen as a huge win for gender rights activists. In fact, feminist leaders are hoping that Iceland will inspire other countries to introduce similar laws.

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New Study Shows That Taxing Unhealthy Foods Could Significantly Reduce Healthcare Costs

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Many have argued that the government ought to tax unhealthy foods and subsidize healthy ones. The theory is that it will incentivize people to eat healthier and reduce medical costs. A new study published in PLOS Medicine seems to confirm this theory.

The study found that if Australia were to tax saturated fat, salt, sugar, and sugar-sweetened beverages and subsidize fruits and vegetables, it would save the country an estimated $2.3 billion (USD).

The study is based on models that are capable of predicting the kind of impact this type of policy would have on consumers. Aside from massive economic savings, the results also indicated that the average citizen would gain an additional lifetime expectancy of 1.2 years.

The study didn’t address, however, how these changes would affect the food industry. If junk food were taxed, it’s safe to assume that people would buy less of it. And on the other side of things, if healthy foods were subsidized, it’s safe to assume people would buy more of it. Therefore, fruit and vegetable growers would likely benefit a great deal from this type of policy. But companies that produce soft drinks, chips, cookies, and the like would suffer a huge loss in sales.

There’s talk of this type of legislature being introduced in the United States. The problem is, junk food companies would never support it. Fast food companies and processed food manufacturers would lobby Congress to reject this type of bill. And why wouldn’t they? They stand a lot to lose if this type of bill were to be enacted.

But what would be a loss for junk food conglomerates would be a gain for the average citizen. People would lose weight. Obesity-related illnesses would decline. And the hard-working citizen would save hundreds, if not thousands, of dollars in medical costs.

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SuperReturn International Brings a Treasure Trove of Private Equity Knowledge

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SuperReturn International, the world’s premier conference on private equity funding, returned for another four days full of informative workshops from February 27 through March 2. More than 2,000 attendees gathered to hear 400-plus speakers discuss economic and geopolitical issues, innovation and disruption in markets, and to learn about technology as it relates to the private equity sector.

The annual conference boasts more speakers who are PE founders, CEOs, chairmen, and global heads than any other private equity conference in the world. Sixteen of them shared their knowledge at the conference, including William E. Ford, CEO of General Atlantic; Lynn Nguyen, Managing Director, Investment Funds Portfolio at Overseas Private Investment Corporation; and David Rubenstein, Co-Founder & Co-CEO of The Carlyle Group.

Ford joined Mike Arougheti of Credit Group, Ares; Jan Stahlberg of EQT AB; and Jason Kelly of Bloomberg LP in a panel discussion entitled “State of the Union: ‘The New World Order.’” The panelists discussed how volatility in the global geopolitical and economic environment could affect alternative investment strategies over the next year.

Nguyen spoke on the sectors, opportunity sets, exit expectations, and growth drivers that present the best investment opportunities. She was joined by Nicolas Schellenbeg of Cambridge Associates, David Creighton of Cordiant Capital, Julien Kinic of IDI Emerging Markets, and Keane Yarish of the European Bank for Reconstruction and Development.

David Rubenstein delivered the March 1 keynote address about a topic that’s on many investors’ minds—how Trump policies will affect the global economy and the private equity world. He also participated in a panel on hot issues in the sector.

Back by popular demand, Zanny Minton Beddoes, Editor-In-Chief of The Economist and one of Forbes’ 100 Most Powerful Women, gave a macroeconomic update and discussed the global political implications of Brexit, China’s falling (and famously volatile) domestic equity markets, and the U.S. elections.

Other SuperReturn International events included a German private equity summit; workshops on succession planning, allocation plans, and generating high returns in the secondaries market; and a series of talks on mid-market investment.

The conference presented an opportunity to see the bigger picture by getting fresh perspectives from outside the PE world. Economists, ethical hackers, tech experts, academics, motivational speakers, and law enforcement officers provided insights on what is happening in their fields and how that could be applied to the private equity industry.

All in all, SuperReturn International provided a tremendous amount of information on an array of topics in the private equity sector. Participants are likely going to spend a great deal of time reviewing their notes and discussing their investment priorities in this economically and politically volatile time.

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