Norway’s $389bn oil fund to take stakes in pre-IPO companies

The world’s second largest sovereign fund’s recently launched capital strategies group will also invest 5 percent of its assets in private real estate deals, but private equity is ‘not part of the investment universe’.

Norway’s $389 billion (€251 billion) “oil fund”  is broadening its investment strategy – but it will not become a direct private equity player as have other sovereign funds flush with petrol profits.
 
“Private equity is not part of the investment universe for the Norwegian Government Pension Fund,” Vegard Vik, head of investment policy for Norges Bank Investment Management, the central bank division charged with investing the fund’s capital, told PEO.
 
Vik’s comment clarifies media reports characterising the fund’s recent shift in allocation strategy, and launch of a capital strategies group, as akin to direct private equity-style investing.
 

Private equity is not part of the investment universe for the Norwegian Government Pension Fund.

Vegard Vik

The world’s second largest sovereign fund lost some $15 billion during the first quarter due to poor global equities performance, but increased its equities allocation to 60 percent from 48 percent in order for its “small but growing” capital strategies group to take strategic, concentrated stakes in public companies.
 
“Pre-IPO type investments could also be an option in the future,” Vik said.
 
The fund has also set a long-term objective of investing 5 percent of its assets in private real estate.
 
Yngve Slyngstad, the oil fund’s chief executive, recently told Reuters that rising oil prices mean the fund’s assets are growing by about $1 billion each week.

“So not only have we got this huge cash flow that we would have to invest anyway, but we are also buying equities and selling bonds to make the transition,” Sylngstad said, referencing the fund’s revamped allocation strategy.

He added that the Norwegian fund is “just weeks away” from owning 1 percent of Europe’s entire stock market, and “our ownership in the rest of the world is months, not weeks, away from crossing half a percent”.