NORWAY - The NOK1.99trn (€222bn) Norwegian Government Pension Fund - Global has confirmed it is considering further investments in India as part of its strategy to invest in emerging markets.

The Norwegian Ministry of Finance announced in April its intention to increase the number of emerging markets included in the fund's benchmark for equities, which currently includes Brazil, Mexico, South Africa, Taiwan and South Korea.

Since 2004, the pension fund has been allowed to invest some of its capital in other emerging markets, such as India, Chile, China and Indonesia, as part of Norges Bank's active management process, but they have been excluded from the benchmark.

However, the Ministry of Finance has confirmed following an assessment published in a report to the Norwegian Parliament in April, it had now decided to include in the fund's equity benchmark "all equity markets in the FTSE All-Cap index", which has led to suggestions the scheme could invest up to $2bn in Indian equities.

Neither the Ministry or the Government Pension Fund - Global were willing to confirm the amount of any further investments or any additional details regarding particular sectors it might target.

However, a spokesman for the Ministry of Finance said: "The fund has held investments in Indian equities for many years, but India has not been included in the fund's benchmark. The Ministry this summer decided to include in the Fund's equity benchmark, all equity markets in the FTSE All-Cap index. This included India."
 
Although he was unable to confirm the approximate sum will be $2bn (€1.5bn), he added the amount will be "based on rough estimates of the fund's benchmark holdings in Indian equities - based on the market weight of India in the FTSE All-Cap index, an equity portion of the fund of 60% and the fund's size".
 
In addition, the Ministry said there is no "set timetable for the change in the fund's benchmark", but admitted alterations "are typically done gradually over time to minimise market impact".

The Norwegian government recently confirmed the Government Pension Fund - Global are on track to meet a target of NOK2.3trn by the end of 2008, despite a negative investment return of -7.4% in the first half of the year. (See earlier IPE article: Norway pension fund on track for 2008 target)

Pension Fund - Global is also in the process of increasing its equity asset allocation to 60%, and is continuing to finalise guidelines allowing it to invest up to 5% of its assets in real estate.

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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