Norway wealth fund to consider investing in unlisted equities

By Victoria Klesty

OSLO (Reuters) -Norway’s $1.3 trillion wealth fund, one of the world’s largest investors, should assess whether to begin investing in unlisted equities, the finance ministry said on Friday, which would be a brand new asset class for the fund.

The fund pools the Norwegian state’s revenues from oil and gas production and invests them abroad in stocks, bonds, property and renewable energy projects.

Managed by a unit of the central bank, it is invested in more than 9,200 companies globally and owns on average 1.5% of all the world’s listed stocks.

“The bank is asked to assess the different aspects of unlisted stocks to form the basis for the ministry’s assessment of this question,” the finance ministry said in its annual recommendation to parliament.

A decision on whether to do so is ultimately up to the country’s government and parliament. It could be presented to parliament next year, Finance Minister Trygve Slagsvold Vedum told Reuters.

Successive Norwegian governments had refrained from such a move until now, due to the risk the fund could be stuck with an investment it could not divest.

Asked whether this could increase the fund’s exposure to risk, Vedum said that would be one of the questions to be examined.

“The advantage of listed shares is that they are more liquid. But when we open for this now, it’s just because we want to have a thorough evaluation of that,” Vedum told Reuters.

The fund is positive to investing in unlisted equity, saying in a Jan. 6 letter to the ministry it was “seeing more and more indications that a larger share of value creation is taking place in the unlisted market”.

In that letter it said that an expert group appointed by the finance ministry in 2017 estimated that the unlisted market was 5% of the size of the listed market.

“The Bank’s updated estimates suggest that this figure is now around 8%,” it said then.

(Reporting by Victoria Klesty, additional reporting by Terje Solsvik, writing by Gwladys Fouche; Editing by Chizu Nomiyama)