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Norway’s Sovereign Wealth Fund Gets Closer to Private Equity

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In a June 29, 2017 letter, Norway’s Finance Ministry asked the central bank to consider whether Norway’s Government Pension Fund Global (GPFG) should be permitted to invest in private equity or unlisted equity. On January 8, 2018, Norges Bank penned an official letter back and gave its recommendations.

Norges Bank had recently advised on private equity in two letters, one dated back on July 6, 2010. The concern then was that private equity required increased head count and operational management. Norges Bank did recommend permitting such investment at the time. Fast forward, Norway’s sovereign fund launched its large real estate program, trailing its expertise in private markets.

“Norway’s sovereign fund is in the trillion dollar investor class. The wealth fund has intimate knowledge with the largest listed companies, as the fund votes on important corporate issues. In addition, the wealth fund has a long-time horizon,” said Michael Maduell, President of the Sovereign Wealth Fund Institute (SWFI).

Clarification: Norway’s SWF does not take board seats. SWFI clarified Michael Maduell’s comments as they could have been construed that Norway’s SWF takes board seats.

Here is the letter (Norges Bank Investment Management website).

After prosecuting its case, Norges Bank believes that if the sovereign fund did invest in private equity, they would most likely want to invest in private equity fund and alongside private equity funds as co-investors.

The letter concludes that, “The Bank’s recommendation is that the Ministry permits investments in unlisted equity in its definition of the investment universe.”

Saudi Aramco Contemplates SABIC Stake from PIF

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Oil giant Saudi Aramco is in early discussions on whether to pursue an ownership stake in Saudi Basic Industries Corporation (SABIC) from the Public Investment Fund (PIF). At the moment, Saudi Aramco has no plans to buy publicly-held shares of SABIC. SABIC was founded in 1976 by Saudi royal decree to convert oil by-products into useful chemicals, polymers, and fertilizers.

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SWFI First Read, July 19, 2018

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GIC Eyes Provenance Land

GIC Private Limited is nearing a deal to purchase up to 50% of Provenance Land. Provenance Land owns India’s first Four Seasons hotel.

Eduard van Gelderen Leaves UC Regents for PSP Investments CIO Role

Eduard van Gelderen exited his position as Senior Managing Director at the University of California Regents’ Office of the Chief Investment Officer. His role will not be replaced. He accepted an offer to be Chief Investment Officer of the Public Sector Pension Investment Board (PSP Investments).

PAAMCO Prisma Holdings CEOs to Exit

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Google Fined Big Time by EU Regarding Antitrust Violations

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The European Union (EU), through its competition commissioner, levied a €4.34 billion fine against Alphabet Inc., the owner of Google. The fine is over Google having “imposed illegal restrictions on Android device manufacturers and mobile network operators to cement its dominant position in general internet search,” according to the European Commission (EC).

The European Commission is requiring Alphabet to cease from its conduct that it is accused of within 90 days or face penalty payments of up to 5% of the average daily worldwide turnover of Alphabet, Google’s parent company.

Commissioner Margrethe Vestager, in charge of competition policy, said in a press release, “Today, mobile internet makes up more than half of global internet traffic. It has changed the lives of millions of Europeans. Our case is about three types of restrictions that Google has imposed on Android device manufacturers and network operators to ensure that traffic on Android devices goes to the Google search engine. In this way, Google has used Android as a vehicle to cement the dominance of its search engine. These practices have denied rivals the chance to innovate and compete on the merits. They have denied European consumers the benefits of effective competition in the important mobile sphere. This is illegal under EU antitrust rules.”

The EC press release added, “In particular, Google: 1. has required manufacturers to pre-install the Google Search app and browser app (Chrome), as a condition for licensing Google’s app store (the Play Store); 2. made payments to certain large manufacturers and mobile network operators on condition that they exclusively pre-installed the Google Search app on their devices; and 3. has prevented manufacturers wishing to pre-install Google apps from selling even a single smart mobile device running on alternative versions of Android that were not approved by Google (so-called “Android forks”).”

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