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Norway SWF seeks to invest in unlisted firms

Norway’s sovereign wealth fund (SWF) – the largest state investment vehicle in the world – is seeking permission to invest up to 1% of its equity portfolio in unlisted firms.

The $1 trillion (€0.9 trillion) fund, which was recently given the go ahead to drop investments in coal and oil companies, should have more autonomy to invest in unlisted equities, fund manager Norges Bank Investment Management said on Wednesday.

Allowing the bank to invest in companies before they are listed enables it to “exploit the fund’s special characteristics”, the asset manager said.

“One alternative to the current mandate provision is to allow the fund to be invested in unlisted shares in large companies that are not yet listed,” it said in response to a request from the country’s ministry of finance to report on its experience of investing in unlisted businesses.

The Norwegian SWF has also been advised by the bank to prioritise investing in North American equities and reduce its exposure to Europe’s developed markets, it said in a statement earlier in the week.

Back in 2012 the fund eased the policy of directing investment to Norway’s most important trading partners, Reuters reported.

Since then it has dropped exposure to European shares from 50% of the total equity holdings to about 34% by the end of last year.

Around 43% of the fund’s investments were in North America at the end of 2018, while 17% were in Asia.

Norway’s rainy-day Government Pension Fund Global was set up in 1990 to invest the proceeds from the country’s oil and gas production.

Although overseen by Norges Bank Investment Management, its strategy is determined by the country’s ministry of finance, which owns the fund on behalf of the people of Norway.

Earlier this year the country’s parliament voted in favour of the centre-right government’s plan for the fund to divest from companies that mine more than 20 million tonnes of coal per year, or generate 10 gigawatts of power from coal.

The move would be the largest divestment from fossil fuels to date.

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