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A Norway with Two Sovereign Wealth Funds

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lakeNorwegian elections are creeping up in what could impact the realm of sovereign wealth funds. Norway’s Conservative Party leader Erna Solberg has a chance of winning as polls suggest the opposition may win parliamentary elections. Politicians often develop economic policies; Erna Solberg seeks to fully review Norway’s Government Pension Fund Global (GPFG) if she wins. One floated idea is splitting up Norway’s sovereign wealth fund. Conservative politicians in Norway contend creating competition among domestic public funds is a good thing. In fact, many countries have more than one sovereign wealth fund or major public pension investor – examples include China, Singapore (GIC and Temasek Holdings), and the Gulf countries. Each sovereign fund could have a separate purpose or goal.

It is competition of public fund performance versus economies of scale.

The ruling party argues that splitting the fund to increase competition would increase risk taking that would focus on short-term results. Splitting the mega fund would increase administrative costs in the aggregate. Not to mention, many policymakers globally look up to Norway’s sovereign fund as a model. Norway’s GPFG operates a relatively low-cost operation compared to other pension investors. 2012 was the sovereign fund’s number #2 year. The fund also made substantial changes in their bond policy and increased diversification out of Europe.

A third way would be to allow Norway’s sovereign wealth fund to invest in other asset classes like infrastructure and renewable energy (preference of Norway’s Progress Party).

CDPQ Boosts Stake in Azure Power

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Disclosed on October 17, 2018, Caisse de dépôt et placement du Québec (CDPQ), through CDPQ Infrastructures Asia Pte Ltd., increased its stake in Azure Power Global Limited, a listed Indian solar power producer. CDPQ increased its ownership in Azure Power to 40.3% ownership by a US$ 100 million commitment in a recent capital raise. Post-deal, CDPQ has invested US$ 240 million in Azure Power.

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Invesco Lost a Big SWF Equity Mandate

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Invesco celebrated its landmark acquisition to acquire OppenheimerFunds from MassMutual. Invesco faced some outflows on its active management side of the business. In the third quarter of 2018, Invesco had outflows from two sovereign wealth funds, which totaled approximately US$ 2.5 billion. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Sky News Reveals CPPIB Eyeing Gatwick Airport

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Mark Kleinman of Sky News revealed that the Canada Pension Plan Investment Board (CPPIB) is seeking to purchase a stake in Gatwick airport. The transaction could be more than £3 billion GBP, as CPPIB seeks to acquire a 42% in the airport from Global Infrastructure Partners. Furthermore, CPPIB would invest more capital into the airport if the deal goes through.

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