OUE

OUE: investing US$200m in Nuvest Real Return Fund, a Cayman Islands-domiciled exempted mutual fund. The Fund, launched in 2012 with seed capital from GIC, seeks to achieve stable annual returns above inflation through diversification across a range of investment classes and active management styles. Management sees this investment as part of its treasury operations and believes this will allow optimal returns on funds held in the current low interest rate environment through leveraging the expertise of the Fund. As at end 2Q14, OCBC notes that the group has significant net cash and equivalents of $449.3m. Overall, the house is Neutral on this move and prefers mgt to return excess capital not earmarked for allocation into the group’s core businesses over the medium to long term. The house maintains its Buy rating with unchanged TP of $2.69 (20% discount to RNAV).