Sovereign Wealth Fund Institute

The press release states, “CPP Investment Board (CPPIB) announced today that a consortium including CPPIB has completed the acquisition of a 24.1% stake in the Gassled Joint Venture (Gassled) from Statoil ASA. The consortium entered into an agreement to acquire this stake in June 2011.

The buyer is Solveig Gas Norway AS, a holding company that is approximately 40% owned by CPPIB, 30% by Allianz Capital Partners, a subsidiary of Allianz SE, and 30% by Infinity Investments SA, a wholly owned subsidiary of the Abu Dhabi Investment Authority. The total value of the transaction as announced on June 6, 2011 is NOK 17.35 billion or approximately C$3.18 billion.

André Bourbonnais, Senior Vice-President, Private Investments for CPPIB, said, “We are pleased to close this significant transaction alongside our consortium partners. Gassled is a good fit with CPPIB’s infrastructure portfolio and long-term investment strategy, and we look forward to becoming an important strategic partner in the future development of the Gassled network.”

Established in 2003, Gassled is an unincorporated joint venture which owns the majority of the gas transport infrastructure on the Norwegian Continental Shelf. It is a core infrastructure asset and a strategic asset in the Northwestern Europe energy landscape. Gassled is expected to benefit from the growth in European gas demand and Norway’s long term position as a key supplier of gas to Europe.”

Read more: Press Release

Ola Borten Moe

In Anchorage at the Alaska World Affairs Council meeting, Norway’s Minister of Petroleum and Energy, Ola Borten Moe made it clear that having a stable tax regime was critical for Norway to capitalize on its offshore oil and gas resources. Taxation structure certainty is an essential driver for oil development businesses to plan investments. The State of Alaska is in debate of whether reducing oil taxes would lead to more energy development in Alaska. One side argues that high taxes hinder energy investment and development. Norway’s tax on oil and gas companies is slightly higher than Alaska’s.

North Slope Crude – State Tax Rate is 57%, plus U.S. Federal Tax of 15% = 72%

Norway’s taxes 78% on oil and gas firm profits; however, Norway offers plentiful deductions on investments.

Recently, Norway discovered a very large oil field and has had around 150 oil and gas discoveries since 2000. This year Statoil ASA made two offshore discoveries of more than 250 million barrels of oil. Experts believe that 60% of Norway’s oil reserves are still underground. Norway does have a few advantages; one is that its offshore oil fields are closer to major markets such as continental Europe, lowering transportation costs, thus increasing profitability.

Yngve Slyngstad

In the aggregate, a growing number of sovereign wealth funds are allocating more to public equities, less in fixed income. This adds a bit of volatility to their portfolios but at the same time, some funds have achieved impressive gains in certain years. Norway’s Government Pension Fund Global has made significant strides in allocating to public equity in markets such as Europe and the United States.

Yngve Slyngstad, the head of Norway’s sovereign wealth fund confirmed that the downgrade rating the United States received had no effect on the way the fund views investments in the country.

During the financial crisis, Norway’s Government Pension Fund Global had exposure to Fannie Mae and Freddie Mac. S&P gave many mortgage CDOs strong ratings at that point in time.

During a news conference regarding 2Q fund results last Friday, Yngve Slyngstad expressed, “The US debt downgrade had no effect on our portfolio or our thinking.”

Karsten Kallevig - NBIM

According to the press release, “The Regent Street Partnership, comprising The Crown Estate and Norges Bank Investment Management (NBIM), has announced the purchase of two Regent Street properties, 4 Conduit Street and 1 Maddox Street, for £28 million.

The partnership owns Regent Street in its entirety and the purchase was made in the partnership’s 75:25 proportions, for The Crown Estate and NBIM, respectively. The Crown Estate continues to manage the street on behalf of the partnership and retains the freehold interest. NBIM, which manages the Norwegian Government Pension Fund Global, has a 150 year lease on a 25 per cent stake in the street.

Maddox House, 1 Maddox Street, was purchased for circa £23 million from pension fund clients of Aberdeen Asset Management. It comprises 17,000 sq ft and is occupied by six office tenants over five floors, together with Regent Street retailers, Hobbs, Barker and Furla. 4 Conduit Street was purchased for £5 million from a private investor; it comprises 6,000 sq ft and is let entirely to the Greek National Tourist Office.

Karsten Kallevig, chief investment officer – real estate at NBIM said: “We’re delighted to have made these purchases and expect to continue to broaden our partnership with The Crown Estate on Regent Street.”

Paul Clark, director of investment and asset management at The Crown Estate, said: “This is an exciting year for the Regent Street Partnership and also The Crown Estate, which remains focused on enhancing its long-term contribution to the Treasury by investing in its core holdings here in the West End, in prime retail outside London, and helping drive forward the offshore renewable energy industry.”

David Shaw, head of Regent Street portfolio at The Crown Estate, added: “These are the Regent Street Partnership’s first major purchases, demonstrating its ongoing commitment to our 20 year regeneration programme that has already transformed Regent Street into an international destination for retail and business.”"

Read more: Press Release

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According to the press release, “Norges Bank will not purchase foreign exchange for the Government Pension Fund Global in January.

The Fund’s foreign exchange requirements are partly met by the state’s direct financial interest in petroleum activities (SDFI) and partly by Norges Bank’s purchases in the market.

The Ministry of Finance determines the size of the monthly allocations to the Fund. Norges Bank’s purchases of foreign exchange are equal to the difference between the allocations and the SDFI’s estimated foreign exchange revenues. Adjustments are made for any revisions of estimates for the previous month. As a result, the daily purchases may vary from one month to the next. The daily foreign exchange purchases are determined for a period of one month at a time and are published on the last business day of the preceding month.”

Read more: Norges Bank

According to the NBIM website, “The Government Pension Fund Global returned 7.2 percent, or 199 billion kroner, in the third quarter, driven by gains in global stock and bond markets. The return was the fifth-largest in the fund’s history.”

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“Better-than-expected earnings figures from a range of companies and reduced fears of an economic slowdown in Europe contributed to the stock market rally,” Slyngstad says. “Concern over some southern European countries’ sovereign debt also eased somewhat.”

Read more: NBIM

Yngve Slyngstad

According to the press release, “Norges Bank, which manages the Norwegian Government Pension Fund Global, has agreed to buy a 150-year lease on a 25 percent stake in The Crown Estate’s Regent Street properties in London. The purchase price is expected to be £448 million, or approximately 4.2 billion Norwegian kroner. A final agreement and completion of the transaction is anticipated by the end of March 2011, giving the fund its first investment in real estate after the Norwegian government on 1 March gave permission to invest in the asset class.

“A move into real estate will strengthen the fund, which today is solely invested in stocks and bonds,” says Yngve Slyngstad, chief executive officer of Norges Bank Investment Management (NBIM).

Regent Street is one of London’s busiest shopping streets with retailers including Apple, Burberry, Banana Republic and Hamleys. The properties in the Regent Street portfolio, which consists of 113 buildings spread over 39 blocks, are owned by The Crown Estate on behalf of the United Kingdom. The partnership would give the fund 25 percent of the properties’ net income, which would mainly come from office and retail space rent. The Crown Estate would retain 75 percent of the income.

“The Crown Estate would continue to be responsible for the management of the portfolio, while NBIM would take part in significant capital decisions,” says Slyngstad.

The Crown Estate has since 2002 been implementing a regeneration programme in Regent Street to transform it into an international destination for business and retail. Further development of the area is set to continue. The fund got a mandate on 1 March to gradually invest as much as 5 percent of its assets in real estate through a corresponding decrease in fixed-income investments. Real estate investments will mainly be in unlisted real estate, well-developed property markets and traditional property types, initially in Europe. The fund’s investments consisted of 60 percent equities and 40 percent fixed-income securities at the end of the third quarter.”

Source: NBIM Press Release

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Estimates by the Sovereign Wealth Fund Institute, SWFs have finally reached the US$ 4 trillion in assets.

Just recently, Norway GPFG published that they topped over 3 trillion kroner for first time. The Norwegian sovereign wealth fund is now $512 billion in assets.  This is a huge milestone in the importance and growth of sovereign wealth funds.  Oil based sovereign wealth funds still hold the lead over non-commodity based SWFs.

“The fund has grown faster and bigger than most people expected since getting its first inflow of capital in May 1996,” says Yngve Slyngstad, chief executive officer of Norges Bank Investment Management (NBIM), which manages the fund.

Read more about: Norway GPFG

Read more about: Fund Rankings

According to the press release, “In the National Budget 2011 the Ministry today announced the establishment of a new Strategy Council with four external members. The Strategy Council has been asked to write a report on the long term investment strategy of the Government Pension Fund Global and present this no later than 1 December 2010.

“Such independent and critical reviews will provide useful professional input while fostering greater transparency and discussion about important issues related to the long-term investment strategy of the Fund,” says Minister of Finance, Sigbjørn Johnsen.

In 2010, the Council will be chaired by Emeritus Professor of Finance Elroy Dimson (London Business School). The other members are Senior Portfolio Manager Antti Ilmanen (Brevan Howard), Senior Analyst Øystein Stephansen (DnB NOR Markets) and Professor in Finance and Rector Eva Liljeblom (Hanken School of Economics).

A further description of the Council’s members and the mandate is available on the Minstry’s web site.

While such reports will be produced regularly going forward, both the composition and mandate of the group may vary from time to time.”

Source: Norway Ministry of Finance – Press Release

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According to the press release, “Norwegian finance minister Sigbjørn Johnsen and Norges Bank’s governor Svein Gjedrem were in attendance on Wednesday when Norges Bank Investment Management (NBIM), manager of the Government Pension Fund Global, opened a new office in Singapore. The office will help NBIM’s existing office in Shanghai to cover the increasingly important Asia region.

Various representatives of the Singapore authorities and local business community, including trade and industry minister Lim Hng Kiang, were also at the opening ceremony.

“An office in Singapore will strengthen our operations in Asia,” commented Gjedrem. “Having a presence in a region with strong economic growth is important for achieving good management results.”

As one of Asia’s foremost financial centres, Singapore offers good investment opportunities and has a well-developed financial infrastructure. Asset management is a major industry in the country, making it possible for NBIM to recruit and retain skilled workers.

“The new office will be a good supplement to the Shanghai office opened in 2007,” commented NBIM’s CEO Yngve Slyngstad.

Sigmund Kyrdalen has been appointed general manager in Singapore. He is a senior portfolio manager at NBIM and managed NBIM’s London office for two years.  The Government Pension Fund Global had a market value of almost 2 800 billion kroner at the end of June. Around 10 percent of the fund is invested in Asia, and around 15 percent of its equity investments are in Asian companies.

Besides Singapore, NBIM has offices in Oslo, London, New York and Shanghai.”

Press Release: NBIM

Martin Skancke

According to the Guardian, “Investors face years of market volatility as governments consolidate their mountains of debt taken on both before and in response to the financial crisis, says the head of Norway’s sovereign wealth fund.

Martin Skancke, director general of the Norwegian Ministry of Finance Asset Management Department and responsible for the country’s sovereign wealth fund, said uncertainty may dominate but the fund’s long-term time horizon gives it the ability to ride out the gut-churning drops and equally fast rises.

“It will take a long time for governments in both Europe and the U.S. to consolidate their balance sheets. I think there will be probably uncertainty about that consolidation process which will give in to market volatility. That is something we are prepared for and can live with,” he said in a recent interview. “It could last a long time,” he added, referring to how governments will handle the aftershock effects of the financial crisis and how that has affected their accumulation of government debt.

On June 7, European Union finance ministers reached an agreement on the details for a 750 billion euro financial safety net for bloc members struggling to convince markets they can deal with high budget deficits and debt. Skancke said the three to five year time frame governments are giving themselves to cleaning up their balances sheets is a signal for continued uncertainty.”

Read more: Guardian

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Europe’s largest oil company, made a natural gas discovery at a record depth in the northern Norwegian Sea that may equal the size of Norway’s annual production of the fuel. The find may the biggest since Ormen Lange in 1997. Norway, the world’s fifth-largest oil exporter and second-biggest gas supplier, is boosting gas output to make up for dwindling crude production after 40 years of pumping oil. The country is opening more of its unexplored northern waters to drilling in areas such as the Norwegian Sea.

Shell, operator of the prospect, made the find in a wildcat well at a depth of 1,376 meters (4,515 feet), the greatest water depth ever in Norway, the directorate said. Wildcat wells are drilled in zones not known to be productive. Shell holds a 50 percent stake in the field and StatoilHydro ASA 40 percent. GDF Suez SA bought a 10 percent stake from Shell on Dec. 23, in a deal that was approved by the Norwegian authorities late May.

read more: Bloomberg

The Independent reports that, “Norway’s sovereign wealth fund is on the verge of an $18 billion (£12.5bn) shopping spree for landmark British and American properties. Norges Bank, Norway’s central bank, which manages investments made from Norway’s vast energy surplus, is understood to be ready to make its first investments by the end of the summer. Paul Golding, the former Merrill Lynch banker who heads the fund’s UK arm, had been expected to start investing money for the fund last year. However Norges needed approval from the country’s government, which was not forthcoming during the financial crisis last year. Mr Golding’s three-man investment team is understood to have stepped up talks with property advisers in recent months ahead of getting the needed permission. Norges is likely to invest as a minority stakeholder in landmark buildings in both the UK and US while prices are low. If this proves successful, it will continue to invest in other markets.”

read more: The Independent