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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.”

FIRRMA Bill is a Big Deal for Foreign Asset Owners

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The United States Treasury is analyzing options on further restricting investments into “sensitive” sectors, such as technology and defense, in the United States from Chinese state-owned capital. The U.S. Commerce Department, under the export control regime, banned U.S. companies from selling parts to ZTE Corporation, a Chinese telecommunications manufacturer, for seven years. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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AIMCo Posts 10.4% Return in 2017

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The Alberta Investment Management Corporation (AIMCo) posted its performance for the 12-month period trailing December 31, 2017, which saw its overall assets grow by 8.4% – or C$ 8.0 billion (US$ 6.1 billion) – to C$ 103.7 billion (US$ 82.3 billion). This represents returns net-of-fees on its C$ 88.2 billion (US$ 70.3 billion) worth of balanced fund investments in 2017 of 10.4%, against a 9.1% custom benchmark. Established in 2008, AIMCo represents the financial well-being of 32 pension, endowment, government, and specialty funds in the Canadian province of Alberta. This includes the Albert Heritage Fund.

[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Mubadala Real Estate Targets JV Developers, Eyeing Local REIT Launch

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Mubadala Investment Company’s property arm is preparing to launch a local real estate investment trust (REIT) by 2020, and is currently in talks with several developers for international joint ventures on a plot-by-plot basis that are expected to be finalized in 2018, according to Ali Eid Al Mheiri, executive director of Mubadala Real Estate and Infrastructure. Ali Eid Al Mheiri is also Vice Chairman of ALDAR Properties PJSC and Chairman of Abu Dhabi Finance Company PJSC. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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