Norway’s $1.5 trillion sovereign wealth fund, the world’s largest, should expand its portfolio to include private equity investments in unlisted companies, the country’s central bank said in a recommendation to the government on Tuesday.
Some 3-5% of the fund’s assets could gradually be moved to private equity funds, equivalent to between $40 billion-$70 billion, the central bank said in a statement.
The Norwegian finance ministry in March asked the executive board of Norges Bank, which manages the fund, to assess whether unlisted shares should be added as an asset class. A final decision will ultimately be made by parliament next year.
The fund, which invests Norway’s surplus oil and gas revenue abroad, is the world’s biggest single stock market investor owning some 1.5% of all globally listed shares, and has stakes in more than 9,200 companies.
“Norges Bank considers it a natural evolution of the investment strategy for unlisted equity investments to be permitted on a general basis,” the central bank wrote in a letter to the finance ministry.
“A broader investment universe will provide more investment opportunities and help the fund benefit from a larger share of global value creation than today,” it added.
At the end of September, 70.6% of the fund’s assets were invested in listed stocks, 27.1% in fixed income, 2.2% in unlisted real estate and 0.1% in unlisted renewable energy infrastructure.
Reuters