By Gwladys Fouche and Victoria Klesty
OSLO (Reuters) – Norway’s $1.4 trillion sovereign wealth fund on Tuesday welcomed a government request that it consider investing in unlisted equities and said it will make a recommendation by December.
The Norwegian Finance Ministry said last month it had asked the fund, the world’s largest single stock market investor, to assess whether to start investing in unlisted equities.
Successive Norwegian governments had refrained from allowing the fund from investing in that asset class, due to the risk it could be stuck with an investment it could not divest from.
Norway’s central bank manages the fund, which owns 1.5% of all globally listed shares with stakes in 9,200 companies.
While more than two thirds of its investments are in stocks, the fund also invests the Norwegian state’s revenues from oil production in bonds, real estate and renewable energy projects.
“Norges Bank looks positively on this review, and we will return with our advice and assessments towards the end of the year,” the central bank’s governor Ida Wolden Bache told a parliamentary hearing on Tuesday.
At present, the fund is only able to invest in a private company if it is about to be listed, but this means the fund risks missing out, its CEO Nicolai Tangen told Reuters.
“Much … of the value creation has already taken place. We want to have a part in that value creation,” Tangen said.
Earlier, Tangen told the parliamentary hearing that investing in private equity had become more transparent.
“Transparency has increased a lot. All the big comparable funds are fairly heavily invested in this (segment),” he said.
“The reputation risk in private equity is actually lower compared to how we are set up now,” Tangen said, adding such investments could potentially yield significant extra returns.
GRAPHIC – Market value of Norway’s wealth fund
https://www.reuters.com/graphics/NORWAY-SWF/RENEWABLES/zgvobrgwxpd/chart.png
(Reporting by Gwladys Fouche and Victoria Klesty, Editing by Terje Solsvik, Ed Osmond and Alexander Smith)
