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The case is being updated.
On Monday, Finance Minister Jan Tore Sanner (H) presented to the Storting the annual report on the Government Pension Fund Global, popularly known as the Petroleum Fund.
In recent weeks and months, the debate over the Oil Fund has centered on the new head of the fund, billionaire Nicolai Tangen. After political pressure, Tangen finally decided to ditch the ownership interest in his life’s work, the management company Ako Capital, to remove doubts about potential conflicts of interest with the Petroleum Fund investments.
In the new report to the Storting, a final sentence is set for the discussion on whether the Oil Fund should be able to invest in companies off the stock market.
No no no
The Norges Bank Executive Board and later the Petroleum Fund Manager Yngve Slyngstad asked three times for permission to invest in unlisted stocks, most recently in 2019. On Monday, the Petroleum Fund received another rejection.
Today, the fund can invest in companies off the stock exchange, if the company’s board of directors has expressed its intention to go public. Is this intention Norges Bank has proposed eliminating it to make it easier to buy shares in companies that are not publicly traded, but likely will be at a later date.
So far, the Petroleum Fund has only used this leeway once: in 2012, the Petroleum Fund’s management invested 1.8 billion for the company that owns Formula 1, Delta Topco.
Nine days later, the fund was left with shares in a Jersey company and a top executive under investigation for corruption. It took several years before the company went public.
The Finance Minister points out that the fund has the opportunity to invest in companies before they go public, but thus sets foot in its own companies that do not have stock exchange plans.
– The intention is for the fund to invest before a next listing. If there is a board decision on a listing, the uncertainty is reduced. There are requirements for a thorough review before investments and the Executive Board must approve the investment, says Finance Minister Jan Tore Sanner.
“It is emphasized that the Executive Board will establish the guidelines for the sale of shares in unlisted companies where the expected listing is not carried out,” the report states.
The Ministry justifies the proposal as follows:
“Unlisted investments are generally more complex than listed investments and are not subject to the same information requirements. Investments are not regularly traded on the market and it is more difficult to discover the real market price of investments. Profitability and risk assessments will therefore be more uncertain than in listed markets. “
The Ministry of Finance recommends that up to one percent of the fund be invested in large companies that intend to go public.
Suggests a change in the benchmark.
The Petroleum Fund is for all practical purposes an index fund. The index is the trading list of stocks and bonds determined by the Ministry of Finance and which the fund must follow closely.
The Ministry proposes to change this benchmark index in the direction of market weights, meaning that the largest company weighs more in the index, regardless of where they are listed.
To date, stocks listed in Europe have had a higher index weight than market value would indicate. The fund was allegedly overweight in Europe and consequently underweight in US equities.
Share in developed markets in Europe is adjusted somewhat lower and share in the US and Canada is adjusted up accordingly, according to Norges Bank’s advice. North America’s share increases from 41.6 to 48 percent, while the European share decreases from 33 to 26.5 percent, according to the report.
– The change we now propose will help investments in the GPFG (Government Pension Fund Global, Oil Fund, editor’s note) better reflect the distribution of value creation in globally listed companies, says the Minister of Finance in a press release.
The Storting Finance Committee is expected to convene a hearing on the report in October. The committee will then convene the Minister of Finance, Governor Øystein Olsen, the Governor of the Petroleum Fund, Nicolai Tangen, and the chair of the Norges Bank Supervisory Board, Julie Brodtkorb, which is the usual procedure.(Terms)Copyright Dagens Næringsliv AS and / or our suppliers. We would like you to share our cases via a link, which leads directly to our pages. Copying or other use of all or part of the content can only be done with written permission or as permitted by law. For more terms, see here.
