Norway’s $890 bn oil fund seeks to double its large equity stakes by 2016

Norway’s $890 bn oil fund, the world’s largest sovereign wealth fund, says it will sharply increase its purchase of large equity stakes, double the number of companies under deep analysis and increase its forecasting horizon in its drive to encourage long-term investment and become a ‘global leader in responsible investment.’

Norges Bank Investment Management, which oversees the fund on behalf of the Norwegian government, says that, by 2016, the fund will own stakes of at least 5 percent in 100 companies, more than double the current number of 45. It says it will also place at least 1,000 companies under ‘deep analysis’ for potential large-scale, long-term investment.

‘The fund’s long-term horizon lends itself to a strategy where we serve as an anchor investor,’ Norges says in its 2014-2016 strategy plan published on its web site. ‘The fund is in a good position to provide capital in special situations such as in relation to initial public offerings, secondary offerings and capital restructurings. We will use these opportunities to build larger ownership stakes in selected companies.’

Norges also says the fund will increase its overall staff to 600 from 370 and boost the number of industry specialists on staff to 50 from 20. It will also invest about 1 percent of the fund in real estate in each of the three years covered by the strategy report and ‘expose the fund to broad markets and risk factors, emphasize low-cost implementation, and use our asset base to provide liquidity to the market.’

The fund says it plans to increase investment in emerging markets equities, mainly through the use of external managers. It says external managers will account for 5 percent of its investments by 2016, particularly those in smaller companies and those focused on ‘environmental mandates.’ It says it expects to have 100 external mandates by 2016.