Norwegian Investment Fund (NBIM) advises private equity
To increase returns over the long run, Norway’s $1.3 trillion sovereign wealth fund has advised that the nation think about investing in unlisted equities. The fund is not currently allowed to make such investments, but despite this Norges Bank Investment Management has openly stated its interest in unlisted markets.
To increase returns over the long run, Norway’s $1.3 trillion sovereign wealth fund has advised that the nation think about investing in unlisted equities. The fund is not currently allowed to make such investments, but despite this Norges Bank Investment Management (NBIM) has openly stated its interest in unlisted markets. Specifically, in a 5 January letter to the Ministry of Finance, the bank said that “we’re witnessing more and more indicators that a growing percentage of value creation is taking place in the unlisted market”.
The Oslo-based fund, which is the largest single shareholder in the world of shares, has previously requested authorisation to undertake unlisted transactions. It claimed that investing in private equity will increase returns in 2018, but Norway’s finance ministry later disputed the notion.
According to NBIM, the number of publicly traded companies has stabilised while declining in developed economies including the U.S., the U.K., and the eurozone. Additionally, companies that do list now are typically older and larger than they were in the past.
“These trends may mean that the fund misses out on an increasing share of companies’ value creation by waiting until they are listed and eventually enter the fund’s benchmark index,” NBIM stated in their recent letter to The Ministry of Finance, adding that, “It should be investigated whether the fund’s investment strategy should reflect these trends, and whether unlisted equities in general should be included in the fund’s investment universe.”
