Photo: Knut Bry.Photo: Knut Bry

Norwegian Investments in the UK

With over 56 billion pounds invested in the UK the Norwegian Government Pension Fund Global is one of the largest state investors in the UK stock market.

Securing Norwegians of the future
In the 1960s Norway established a new state pension system based on the idea that payments into the system by those working would be able to cover disbursements to the pensioners. This proved to be wrong. At the time, it was also believed that there was no oil in the North Sea. Luckily, this also proved to be wrong.

Today Norway is the second-largest net exporter of gas and the seventh largest exporter of oil in the world. Gas and oil related activities are a substantial part of the Norwegian economy. The large revenues from the petroleum sector made it possible to establish the Government Pension Fund Global (GPFG) which was designed to manage the country’s petroleum revenues over the long term and support government savings to finance public pension expenditures.

From the stock market to Regent Street
The Government Pension Fund Global, previously known as the oil fund, was established in 1990 and is today the largest sovereign wealth fund in the world with a market value of more than 435 billion pounds. The Fund has invested in more than 7 000 companies. The strategic asset allocation is 60 per cent equities, 35-40 per cent bonds and up to 5 per cent real estate.

The Fund is managed by Norges Bank Investment Management (NBIM), a part of the Norwegian Central Bank, on behalf of the Norwegian Ministry of Finance. The NBIM has offices in Oslo, London, New York, Shanghai and Singapore.

The Fund has stakes that range from two per cent in British luxury brand Burberry and high street stalwart Marks & Spencer, to a four per cent stake in insurer Prudential. Norway also holds close to five per cent of property investor British Land and two per cent of Rolls-Royce.

Previous to 2009 the Fund only invested in the international stock and fixed income market. However, in 2010 the Norwegian Government decided that up to five per cent of the Fund is to be invested in real estate.

Hence, in addition to owning two per cent of UK’s benchmark share index, the Fund owns a 150-year lease on a 25 per cent stake of Regent Street in London and 50 per cent of Meadowhall Shopping Centre in Sheffield. The Fund has also through a joint venture with Prologis bought 50 per cent of a portfolio of logistic properties. The portfolio consists of 195 properties in 11 European countries including the UK and Norway is quickly becoming one of the world’s most important real estate investors.

Transparency and accountability is key
Transparency and accountability are prominent features of the Fund’s governance model. The standard was set at an early stage when the Executive Board decided that a complete list of the Fund’s investments should be published at the turn of each year. The first list was published in the annual report for 1998. This decision has paved the way for all the subsequent discussions about various individual investments and is a precondition for ensuring widespread confidence in the management of the Government Pension Fund Global.

If you visit the Fund’s website you are able to see how the estimated size of the world’s largest sovereign wealth fund is updated several times a second. You can also access information about how and where the Fund is investing and view the fund’s guidelines for responsible investment practices.

As part of the Fund’s work on responsible investments, the Ministry of Finance has guidelines for surveillance and exclusion of companies from the Fund. This right is regularly exercised to ensure a high ethical standard.

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