Norway oil fund shakes up investment style
The Local - [email protected] •
24 Jun, 2014
Updated Tue 24 Jun 2014 14:02 CEST
Norway’s $890 billion sovereign wealth fund, the world's largest, has announced plans to up its investments in “frontier markets” and double the number of companies in which it takes big, activist stakes.
In its strategy document for 2014 to 2016, Norges Bank Investment Management, the fund's manager, said it aimed to increase the number of "significant holdings" in which it holds more than five percent from 45 last year to 100 by 2016. "The fund is in a good position to provide capital in special situations such as in relation to initial public offerings, secondary offerings and capital restructurings," it said. "We will use these opportunities to build larger ownership stakes in selected companies." To do this, it plans to increase the number of companies under "deep analysis" to 1000. It also said it would increase its “exposure to different sources of return and seek to exploit time-varying investment opportunities,” adding "new frontier markets" to its equity investments and new currencies to its "fixed-income investments" . NBIM has in the past invested the Government Pension Fund of Norway, as the fund is officially known, predominantly by taking small stakes of less than one percent in a broad spread of companies, predominantly in developed markets in Europe, the US and Japan. It now owns as much as 1.3 percent of the world's equities, having earned an average four percent return on its investments since the late 1990s. NBIM said that it would be easier to reach its goal of four percent real returns if it shifted its investments to faster growing countries in the global economy. "The overall objective of the fund may over time be better served if a larger share of the fund is invested in assets with income streams that grow in line with the global economy," it said. To manage the fund's expanded focus, it intends to nearly double its investment staff from 370 to 600 over the next two years.
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In its strategy document for 2014 to 2016, Norges Bank Investment Management, the fund's manager, said it aimed to increase the number of "significant holdings" in which it holds more than five percent from 45 last year to 100 by 2016.
"The fund is in a good position to provide capital in special situations such as in relation to initial public offerings, secondary offerings and capital restructurings," it said. "We will use these opportunities to build larger ownership stakes in selected companies."
To do this, it plans to increase the number of companies under "deep analysis" to 1000.
It also said it would increase its “exposure to different sources of return and seek to exploit time-varying investment opportunities,” adding "new frontier markets" to its equity investments and new currencies to its "fixed-income investments" .
NBIM has in the past invested the Government Pension Fund of Norway, as the fund is officially known, predominantly by taking small stakes of less than one percent in a broad spread of companies, predominantly in developed markets in Europe, the US and Japan.
It now owns as much as 1.3 percent of the world's equities, having earned an average four percent return on its investments since the late 1990s.
NBIM said that it would be easier to reach its goal of four percent real returns if it shifted its investments to faster growing countries in the global economy.
"The overall objective of the fund may over time be better served if a larger share of the fund is invested in assets with income streams that grow in line with the global economy," it said.
To manage the fund's expanded focus, it intends to nearly double its investment staff from 370 to 600 over the next two years.
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