April 5, 2017 Read More →

Norway’s Wealth Fund May Be Allowed to Invest in Unlisted Stocks Next Year

Reuters:

Norway’s government may allow its sovereign wealth fund, the world’s largest, to invest in private equity and unlisted stocks from next year but said on Friday it remains opposed to letting it invest in unlisted infrastructure projects.

The fund, into which excess revenues from Norway’s oil and gas production are saved, is currently permitted to invest only in listed stocks, bonds and real estate. It can only invest in unlisted equities if an initial public offering is planned.

Executives running the fund have previously pointed out that many rapidly growing firms, including Uber and Airbnb, were off-limits.

“We see that the listed market is a limited part of the value creation by companies,” Tore Vamraak said. “We see a possibility to boost the return of the fund with a moderate risk.”

Since the fund started as a sovereign fund in 1998, it has returned an average of just 3.79 percent per year, short of its target of 4 percent.

The minority government repeated it was opposed to letting the fund invest in unlisted infrastructure such as roads, bridges and wind farms, due to the political risk these investments may carry and their high transaction costs.

It had opposed loosening the rules in last year’s review but lawmakers had said the question should be discussed again.

Tom Sanzillo, director of finance at the U.S.-based Institute for Energy Economics and Financial Analysis, said the government should look again at unlisted infrastructure investments.

“They seem to be walking away from a market that is a trillion dollars and that is growing exponentially in the coming years. This is not prudent,” Sanzillo, who wrote a 2017 report on renewable energy infrastructure investment and the Norwegian fund, told Reuters.

“They appear to lack confidence in their own abilities and that is worrisome.”

Norway’s wealth fund may be allowed to invest in unlisted stocks next year

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