Plans are moving ahead in Norway for the creation of a new state asset management unit to be based in the northern city of Tromsø, with a government-commissioned panel recommending the new fund be kept separate from the country’s existing sovereign wealth fund.
The Finance Ministry yesterday published the report of the working group it set up in September to investigate how the state can establish a new state unit for asset management in Tromsø.
The idea was part of this spring’s annual white paper on the Government Pension Fund (GPF), and originated as a way of solving the problem that the domestic and portion of the SWF – the Government Pension Fund Norway (GPFN) – was hitting its ownership limits in Norwegian listed companies.
The ministry said: “The group recommends that the new unit be allowed to invest in unlisted securities, and that this be done outside the Government Pension Fund.”
Finance Minister Trygve Slagsvold Vedum said: “Now we are one step closer to creating a new asset management environment in Tromsø”.
He said this could lay the foundation for a strong financial environment and important new jobs in Northern Norway and in Tromsø.
“Such an administrative environment could create major ripple effects,” said Vedum.
The working group has recommended that the unit be given an investment universe that includes unlisted investments, in order to avoid overlap with existing state management environments, the ministry said.
The panel concluded in the report that there was probably greater scope for market niches where the state was not already present in the unlisted market.
As to who should manage the new unit, the group said the choice of manager was linked to which investment universe the unit received, and that based on an unlisted mandate, it recommended a new management unit be established.
One of the ideas under consideration is that Folketrygdfondet, which runs the GPFN, should also run the new investment unit.
The working group said in its report that it was still entirely possible to use Folketrygdfondet as manager, if the investment universe of the new unit was adapted to the management expertise that organisation had.
The reason the working group has recommended that investments in the new unit be placed outside the GPF is that there would otherwise be a break with the long-standing political agreement that the SWF is a financial asset managed with the aim of the highest possible return over time.
“Furthermore, the group points out that the unit’s aim of contributing to state presence and building capital management environments differs from the purpose of the Government Pension Fund,” the Finance Ministry said.
Working titles given for the proposed investment unit in the report are “Statens Nye Nordlige Fond” (Government New Northern Fund) and “Statens Pensjonsfond Arktis” (Government Pension Fund Arctic).
The investments look likely to be Norwegian, but the working group has recommended not restricting the geographical universe too much.
Regarding the size of the new fund, according to the report, the fund should be able to invest around NOK30bn (€2.9bn) “within a reasonable time horizon” if its aim is to resolve the GPFN’s ownership ceiling problem.
The ministry said it would now assess the recommendations in the report, and planned to mention the matter in the next white paper on the GPF in the spring.
Read the digital edition of IPE’s latest magazine
No comments yet